Buying April 3, 2023

What is a pre-approval when buying a home, and why do you need one?

If you’re ready to begin your home shopping journey, make sure you get a mortgage pre-approval first.

mortgage pre-approval letter is an essential step in the homebuying process. Without pre-approval, it might be difficult to determine your budget. Plus, you risk not being taken seriously by sellers — especially in a highly competitive real estate market.

Below, CNBC Select breaks down how a mortgage pre-approval works and when you want to get one.

What is mortgage pre-approval?

A mortgage pre-approval is a document from a lender conditionally offering you a mortgage and containing its terms, such as the loan amount, monthly payments and interest rate. This is a lender’s promise that unless your financial situation changes by the time of purchase, you’ll be approved under the outlined terms.

A mortgage pre-approval is different from a pre-qualification, even though people often use these terms interchangeably. A lender will pre-qualify you based on the information you provide and typically without running a hard credit check and give you a rough estimate of how much you’ll be able to borrow. You won’t need to submit any documents to prove the information is accurate.

When you’re getting pre-approved, a lender will verify your creditworthiness. You’ll need to complete a mortgage application and provide documents such as your recent pay stubs, bank statements and tax returns. The lender will also perform a hard credit pull, meaning your credit score can temporarily drop a few points.

Your pre-approval letter’s expiration date can also vary by lender, but most allow you 30 to 90 days to shop for a home and officially apply for a mortgage.

Why you need a mortgage pre-approval

You want to get a mortgage pre-approval at the beginning of your homebuying journey for two reasons:

That’s the best way to learn your maximum loan amount

While you can estimate how much house you can afford using an online calculator or by pre-qualifying, a pre-approval will give you the most accurate number. This way, you’ll know your price range and what houses you can actually afford. Discovering a lender is willing to part with less money than you had hoped is always a disappointment, but at least it allows you to take stock of your finances or save more for a down payment before proceeding further in the homebuying experience.

You will position yourself as a serious buyer

A pre-approval letter shows that you can secure a mortgage. This alone gives you an advantage over potential buyers without pre-approval, especially in competitive markets where real estate agents and sellers can afford to be picky about with whom they work.

If you really want to give yourself an edge in the market, obtain pre-approval letters from several lenders. A house will probably be the most expensive purchase you’ll have made. A slight difference in the interest rates a lender charges can mean significant savings, so it pays to shop around. When it’s time to put in an offer, you can go with the lender that has offered you the best terms.

And don’t worry about extra hard inquiries on your credit report. When you apply with multiple mortgage lenders in a short period of time (14 to 45 days of each other, depending on a credit scoring model), the credit pulls will count as a single inquiry.

How to get pre-approved for a mortgage

Since pre-approval is a much more rigorous process than pre-qualification, you want to have all your ducks in a row before applying.

First, check your credit score as it will play a big part in the lender’s decision. You can use a credit monitoring service from your credit card issuer, such as CreditWise® from Capital One. You can also check your credit by using a free service from Experian — Experian free credit monitoring. The higher credit score you have, the better the terms you’ll receive on a mortgage.

You won’t see the exact score your lender will be checking as mortgage lenders use scoring models not readily available to the public. Still, it will give you a good idea of what you’re working with.

Next, prepare the documents that will show lenders your debt, income, assets and other aspects of your personal finances. While every lender has different requirements, having the following in hand is a good starting point:

  • At least two most recent pay stubs
  • Tax returns from the past two years
  • Bank statements from the last 60 days
  • Employment verification documents
  • Employer contact information
  • List of your debts
  • Investment account statements, including 401(k) and IRA
  • Proof of rental payments or landlord contact information
  • Gift letters (if you’ve been gifted money for your down payment)

It’s best to have all your paperwork ready before you apply — this will save you time on the back-and-forth with the lender.

Bottom line

A mortgage pre-approval can help you gauge how much mortgage you can afford and position yourself as a serious homebuyer. It’s a good idea to apply for pre-approval at the beginning of your homebuying journey — or even better, apply with several lenders to ensure you get the lowest interest rate you can.

Originally posted here

Selling March 20, 2023

4 Things First-Time Home Sellers Regret Most

Selling your home is a big decision, which is why you want to make sure you and your property are ready for it when the time comes. From setting an asking price to deciding when to list your home, there’s a lot you’ll need to consider as a seller. The last thing you want to feel once your home is sold is regret over some of the choices you made—which many people say they do.

According to a new Zillow survey, 84 percent of Americans who sold a home for the first time in the past two years wish they had done something differently. The poll reveals that many recent first-time sellers have regrets about the pricing, timing, or marketing of their home. To avoid these mistakes when it’s your time to list, it helps to understand the survey participants’ key errors.

Pricing Incorrectly

The most common thing participants in Zillow’s survey say they wish they had done differently is set a higher list price. Now more than ever, it can be difficult to decide on how much to list your home for. Pricing it too high could lead to a slower sale, but pricing it too low may leave you wishing you had listed it for more.

“This spring’s sellers are more likely to regret pricing their home too high,” said Zillow senior economist Nicole Bachaud. “The price their neighbor commanded a year ago may no longer be realistic. They need to adjust their expectations if they want to avoid having their home linger on the market.”

Ignoring Online Curb Appeal

Don’t underestimate the importance of virtual curb appeal when it comes to selling your home. About 90 percent of recent first-time sellers think something could have helped them get a higher sale price—and 39 percent of those respondents believe that better listing photos could have boosted their sale (25 percent say a virtual tour also might have helped).

Many prospective buyers look for homes online, which means you shouldn’t ignore that website listing. Consider creating a media package that includes high-resolution photography to help highlight your home’s best features. According to Zillow, listings that include a virtual home tour get 69 percent more views and 80 percent more saves.

Bad Timing

Twenty-five percent of people who took Zillow’s survey say they wish they had listed their home a different time. While the best time to sell is a personal choice, if you have flexibility, the optimal time to list a home is during the second half of April, says Zillow.

Timing the sale of a home with the purchase of another house is one of the biggest stressors for sellers. About 36 percent of first-time sellers wish they had known how long it would take for their home to sell. About 37 percent of sellers say selling their home on their timeline, with a flexible closing date, or selling quickly was their top priority.

Skimping on Repairs

Sprucing up your home before selling it may be worth the extra costs. According to Zillow’s survey, 25 percent of participants believe they could have gotten a higher sale price if they had invested in more home improvements and repairs. Despite this regret, most sellers (66 percent) report taking on at least two home improvement projects before selling and 78 percent believe those projects helped them sell their home.

“The right projects can pay off,” said Amanda Pendleton, Zillow’s home trends expert. “Sellers need to think strategically about their return on investment before diving into repairs and renovations. Landscaping, interior painting and carpet cleaning are the most commonly completed seller projects for good reason. They boost online curb appeal and send a powerful signal to a buyer that a home is well-maintained.”

 

Buying March 20, 2023

Young Adults Living With Parents Are Ready to Purchase

New data suggests that more people ages 25 to 34 have saved enough while staying with family to move out on their own.

A record number of young adults moved back home during the pandemic—the most since 1960, according to industry data—but signs are emerging that they’re finally ready to branch out on their own. In 2022, 15.6% of adults ages 25 to 34 lived at home with their family, down from 17.8% in 2020, according to a National Association of REALTORS® analysis of Census Bureau data. Still, the percentage is high: Historically, it tends to be less than 10%.

In recent years, high rents and the flexibility of remote work have prompted many young adults to move back home, Jessica Lautz, NAR’s deputy chief economist and vice president of research, says at the Economists’ Outlook blog. “It is possible that moving home allowed these young adults a financial boost that they would not have had otherwise,” Lautz says. “It could have translated into savings, paying down existing debt and working on their credit score and debt-to-income ratio.”

Six percent of student debt holders say they were able to pay off or get closer to paying off their loans earlier than expected because they moved in with family, according to Lautz. Moving home also may have given that group extra time to save up for a down payment. That’s an important benefit as the home affordability crisis worsens. The median price of a single-family home rose by nearly $100,000 from 2020 to 2022.

Rents also are up by double digits, jumping 14% from 2021 to 2022, which may be prompting more young adults to move straight from their parents’ house into a home of their own, Lautz says. The share of first-time buyers who moved directly from a family member’s home grew at a significant rate, reaching 27% in 2022 compared to 15% in 1995, NAR data shows.

“While living at home may not be an ideal long-term scenario for many people, if prospective first-time buyers can move home before purchasing, this might financially help them save to purchase a home,” Lautz says. “The added flexibility of living with family allows a buyer to navigate the tight housing market with limited affordable inventory.”

 

Market TrendsReal Estate February 27, 2023

Expect a competitive shopping season, despite few available homes

Though easing mortgage rates are bringing buyers back, don’t expect the fervor of recent years

  • Buyers should expect to face intensifying competition over the next few months.
  • Homeowners are largely staying put, so attractive listings will see strong interest.
  • Affordability remains the biggest challenge for buyers and sellers, with both keeping a close eye on mortgage rates.

The fast-approaching spring home shopping season should feel a bit calmer than in recent years. Shoppers can expect competition for well-priced homes, but without the crowds of buyers that packed open houses like they did in 2021 and early 2022, according to a new Zillow® analysis.

“Affordability will still be a challenge for many buyers this year, but sellers who price and market their home competitively shouldn’t have a problem finding a buyer,” said Zillow senior economist Jeff Tucker. “The slight drop in mortgage costs since October should revive demand after last fall’s slump, especially in more affordable markets and neighborhoods, but we are unlikely to see competition approach the fever pitch seen in the last two years.”

Mortgage movement sets the stage
The market cooled dramatically in the second half of 2022, amid rising mortgage rates and two straight years of red-hot competition. But as mortgage costs bumped down from their peak in the fall, sales returned. Though sales still remain below where they were a year ago, they’ve rebounded significantly over the past few months.

Buyers today are typically spending roughly 31% of their household income on a mortgage — $1,595 a month — after a 20% down payment1. That’s $170 a month below the 34% of income required in October, but far above the 20%–22% they were spending in the ten years before the pandemic — the monthly cost of principal and interest was less than $900 in January 2019.

Still, even while affordability impacts the share of households looking to buy, demographics are contributing to demand through sheer numbers. Zillow’s 2022 national consumer survey found the median age of the first-time home buyer was 35 years old. The youngest members of the massive millennial generation are now entering their late 20s, the oldest are approaching their mid-40s, and the bulk will soon be hitting prime first-time home-buying milestones.

Spring outlook and what it means for buyers, sellers and prices
There are as few homes for sale to start the year as there were in 2021, which, at the time, was a new record for scarcity. But the market is far from the white-hot demand-side conditions of early 2021 and 2022, when ultralow mortgage rates triggered bidding wars over most listings.

Buyers should expect competition — especially in more affordable markets like Cincinnati and St. Louis — and at lower price points. Buyers will mostly be motivated by the life transitions that have always triggered home purchases — new jobs, marriages and births — and less by the deal of a lifetime on mortgage rates.

On the sellers’ side, well-priced, well-marketed homes will receive attractive offers during their first weekend on the market, but many listings will take longer and will need price cuts to sell. Last month, 22% of listings saw a price cut, more than any January since at least 2018.

Buyers and sellers waiting for home prices to either plunge or skyrocket will be disappointed. Instead, prices are forecast to move on a slow, boring trajectory like they have historically, and inch a little higher in spring after seasonal winter lows.

While heat in the housing market has ticked up in the past few months, there’s no guarantee it will continue along this path. The courses of inflation, unemployment and especially mortgage rates will determine what comes next.

Mortgage rates will affect both demand and supply significantly. If rates move lower, toward 6% or below, they will bring more buyers into the fold and make it more palatable for homeowners to sell, increasing supply. If rates hover in the upper 6% range or above, buyers may once again put their house hunt on hold.

“The housing turnaround since November has coincided with what are typically the weakest three months of the year — forecasting the future off that can be dicey,” Tucker said. “The economic news from earlier this winter raised hopes for a soft landing of the economy and housing market, but the risk of renewed inflation or even a recession is still significant, and either would have a serious impact on the housing market.”

Uncategorized February 23, 2023

Expect a Competitive Shopping Season, Despite Few Available Homes

Though easing mortgage rates are bringing buyers back, don’t expect the fervor of recent years

  • Buyers should expect to face intensifying competition over the next few months.
  • Homeowners are largely staying put, so attractive listings will see strong interest.
  • Affordability remains the biggest challenge for buyers and sellers, with both keeping a close eye on mortgage rates.

SEATTLEFeb. 16, 2023 /PRNewswire/ — The fast-approaching spring home shopping season should feel a bit calmer than in recent years. Shoppers can expect competition for well-priced homes, but without the crowds of buyers that packed open houses like they did in 2021 and early 2022, according to a new Zillow® analysis.

“Affordability will still be a challenge for many buyers this year, but sellers who price and market their home competitively shouldn’t have a problem finding a buyer,” said Zillow senior economist Jeff Tucker. “The slight drop in mortgage costs since October should revive demand after last fall’s slump, especially in more affordable markets and neighborhoods, but we are unlikely to see competition approach the fever pitch seen in the last two years.”

Mortgage movement sets the stage
The market cooled dramatically in the second half of 2022, amid rising mortgage rates and two straight years of red-hot competition. But as mortgage costs bumped down from their peak in the fall, sales returned. Though sales still remain below where they were a year ago, they’ve rebounded significantly over the past few months.

Buyers today are typically spending roughly 31% of their household income on a mortgage — $1,595 a month — after a 20% down payment1. That’s $170 a month below the 34% of income required in October, but far above the 20%–22% they were spending in the ten years before the pandemic — the monthly cost of principal and interest was less than $900 in January 2019.

Still, even while affordability impacts the share of households looking to buy, demographics are contributing to demand through sheer numbers. Zillow’s 2022 national consumer survey found the median age of the first-time home buyer was 35 years old. The youngest members of the massive millennial generation are now entering their late 20s, the oldest are approaching their mid-40s, and the bulk will soon be hitting prime first-time home-buying milestones.

Spring outlook and what it means for buyers, sellers and prices
There are as few homes for sale to start the year as there were in 2021, which, at the time, was a new record for scarcity. But the market is far from the white-hot demand-side conditions of early 2021 and 2022, when ultralow mortgage rates triggered bidding wars over most listings.

Buyers should expect competition — especially in more affordable markets like Cincinnati and St. Louis — and at lower price points. Buyers will mostly be motivated by the life transitions that have always triggered home purchases — new jobs, marriages and births — and less by the deal of a lifetime on mortgage rates.

On the sellers’ side, well-priced, well-marketed homes will receive attractive offers during their first weekend on the market, but many listings will take longer and will need price cuts to sell. Last month, 22% of listings saw a price cut, more than any January since at least 2018.

Buyers and sellers waiting for home prices to either plunge or skyrocket will be disappointed. Instead, prices are forecast to move on a slow, boring trajectory like they have historically, and inch a little higher in spring after seasonal winter lows.

While heat in the housing market has ticked up in the past few months, there’s no guarantee it will continue along this path. The courses of inflation, unemployment and especially mortgage rates will determine what comes next.

Mortgage rates will affect both demand and supply significantly. If rates move lower, toward 6% or below, they will bring more buyers into the fold and make it more palatable for homeowners to sell, increasing supply. If rates hover in the upper 6% range or above, buyers may once again put their house hunt on hold.

“The housing turnaround since November has coincided with what are typically the weakest three months of the year — forecasting the future off that can be dicey,” Tucker said. “The economic news from earlier this winter raised hopes for a soft landing of the economy and housing market, but the risk of renewed inflation or even a recession is still significant, and either would have a serious impact on the housing market.”

The share of median household income needed for a new 30-year fixed-rate mortgage on a typical U.S. housing unit, measured by the Zillow Home Value Index.

Article Courtesy of Zillow

Market TrendsReal Estate January 30, 2023

Looking ahead at the housing market in 2023

Rollercoasters are designed to take riders on an unpredictable journey with periods of exhilaration, intensity and fear. Kind of sounds like the housing market over the last twelve months, doesn’t it?

2022 was truly a roller coaster year in housing. Just to look at one metric that we’ve been following all year, the average 30-year fixed mortgage rate in January of 2022 was 3.60%–in December of 2022 that rate stood at 6.39%. That was just a few weeks after it average rate reached 7.20%, its highest level in twenty years.

While signs of a changing rate environment were evident a year, we had no way of knowing how much mortgage rates were going to rise in 12 months. Some things that affected those changing rates, like war in Ukraine and rising inflation, had yet to take hold. So needless to say, it’s a much different housing market that we preview heading into 2023 than it was last year.

Where will rates go?

The number one concern for most people who are interested in buying a home in 2023 is what is going to happen to mortgage rates. Rates have gone up in relation to the Federal Reserve’s federal funds rate, which has risen from near zero at the beginning of 2022 to around 4.25% by the end of the year. The Fed is expected to keep increasing their rate in order to get inflation under control, but at a slower pace in the first part of 2023.

That should affect mortgage rates, allowing them to continue dropping. As mentioned above, national average rates hit 7.20% at the end of October, then started dropping. This was partially due to good news on inflation and the Fed indicating that they were going to ease up on rate hikes.

Expert predictions on rates

Many of the most respected industry watchers are predicting that rates will continue to come down in 2023. The Mortgage Bankers Association (MBA) and the National Association of Realtors® (NAR) both are forecasting that mortgage rates come down throughout the year, and finish 2023 in the mid-5% range. Fannie Mae and Freddie Mac take less optimistic views, seeing rates hovering in the high-6% range and finishing the year near 6.2%-6.5%.

The wild card in this outlook is inflation. The Fed is trying hard to put a dent in rising inflation, and the latest reports suggest that inflation is at least slowing down. If this continues, you can hope to see mortgage rates behave like the MBA and NAR are predicting. However, if inflation rises, rates may stay near where they are now—or even go up—for the year.

Home prices: Up or down?

Tracking home prices can be a good news/bad news proposition. When home prices go up, that’s good news for homeowners and sellers, but bad news for homebuyers. When they go down, that could be seen as bad news for homeowners as their home’s value is also theoretically going down, as well.

However, high home prices along with high rates have priced many would-be homebuyers out of the market. And that’s been bad news for sellers lately, as there are fewer buyers and therefore lower demand. So, a drop in home prices, along with a drop in mortgage rates, would be great news for everyone.

Home price forecast

The MBA sees home prices remaining stable throughout the year, with projected median price of total existing homes starting the year around $366,000 and ending the year around $377,000. Lawrence Yun, chief economist at NAR, foresees similar price stability, with median home prices increasing just 0.3% according to their forecasts. “Half of the country may experience small price gains, while the other half may see slight price declines,” Yun says.

Real estate website Redfin is also predicting good news for homebuyers. Their forecast is for the first year-over-year decline in the last decade, with an average home price at $368,000. So while home prices aren’t dropping to where they were pre-pandemic by most of these forecasts, they are likely staying near where they’re ending 2022 as we move ahead to 2023.

Looking ahead at housing affordability

More than the mortgage rate or the price of the home, most homebuyers start with this question: Can I afford it? Housing affordability refers to the amount of a homeowner’s monthly budget their home payments represent. Over the last twelve months, this has gotten worse and worse, making it extremely hard for first-time homebuyers in particular to purchase a home.

If mortgage rates come down, and home prices are at a lower average than last year, that means that housing affordability will come down. Hopefully, in 2023 more people will be able to answer yes to that question.

Let’s take a look at what would happen if some of the above predictions would actually happen. As an example, we’ll compare the MBA’s predictions for average home prices and mortgage rates in spring of next year with an average priced home and mortgage rate in October of 2022, assuming a 20% down payment in both cases.

*Sample rate provided for illustration purposes only and is not intended to provide mortgage or other financial advice specific to the circumstances of any individual and should not be relied upon in that regard. Guaranteed Rate Affinity cannot predict where rates will be in the future. 

That’s a difference of $434 a month, with $5,480 less spent on a down payment, which could make a big difference for many and turn a potential homebuyer into a homeowner.

New construction outlook

One reason that home prices have gone up so much is that there hasn’t been enough homes available to buy. The low rates we saw during 2020 and 2021 made this problem worse, as more people were looking to purchase a home, but it’s a problem with origins that started years before the pandemic. Housing inventory has been dropping since 2010.

One solution to not enough homes available to buy is to build more homes. However, rising mortgage rates scared off many builders from starting new projects, as builder confidence went down for 11 consecutive months in 2022.

The MBA has watched new housing projects that began work, known as new housing starts, go from 1.72 million at the beginning of 2021 down to 1.461 million in the third quarter. The projected average of new housing starts for 2022 was 1.567million.

They’re expecting that downward trend to continue into 2023, forecasting 1.472 million housing starts in 2023. That likely won’t be enough to bring relief to the inventory issue and therefore won’t put significant downward pressure on home prices in the new year.

Trends to keep an eye on

With those four major factors accounted for, what will that mean for the rest of the housing market? Here are some more housing market predictions:

Hot months for homes

In most years, spring and summer are the most popular times to buy a home, but the pandemic threw that trend out the window. With rates so low in 2020 and 2021, along with the increased flexibility most people had due to work-from-home and online school, we saw demand spike throughout the year.

Now that rates have increased, many families have settled back into their pre-pandemic work and school routines. As Jeremy Collett, Executive Director of Capital Markets at Guaranteed Rate, says, “No matter what, I think we will see a return to seasonality, with a focus on home sales in spring and summer when people are more inclined to move.”

From bonkers to a buyer’s market

One of the most memorable parts of the housing market over the last few years was how much of a seller’s market it became. Houses would sell in less than 24 hours after listing, above asking price, with inspections waived. That’s how desperate buyers were to close on a home with the low rates we were seeing then.

But thankfully that’s in the past. We’ve seen demand dip as rates have gone up in the past year, and that should continue. Danielle Hale, chief economist for Realtor.com, wrote in her housing forecast, “There will be more homes for sale, homes will likely take longer to sell, and buyers will not face the extreme competition that was commonplace over the past few years.”

The importance of a fast, frictionless experience

Real estate happens more and more in a digital landscape these days. From finding a home online, to applying for a mortgage and even closing, almost the entire process can take place on a screen. But that makes customer service, speed, and efficiency all the more important.

Guaranteed Rate has been at the forefront of this revolution, from introducing the first Digital Mortgage, to FlashClose® technology and MyAccount. And we’ll continue to lead, with exciting new apps and tools on the way to make your financial life easier and give you an advantage when buying a home. All of this tech is backed up by our mortgage loan experts, who are always ready to help if you need any.

It’s our commitment to helping make the process of getting a home easier for you that we are optimistic about the year ahead. When you work with a Guaranteed Rate Affinity loan officer, you’ll know that you’ll have an expert on your side to help you realize your dream of homeownership, no matter what happens in the market in 2023.

 

Original Article Posted Here

Market TrendsReal Estate January 30, 2023

Consumer confidence in housing finally rises, thanks to falling home prices

Mortgage rates are still twice what they were a year ago, but home prices have been falling since June, and that’s finally making consumers feel better about what had been an overheated, highly competitive housing market.

A monthly housing sentiment index from Fannie Mae showed sentiment improving from November to December. The index is still lower than it was a year ago and just slightly off its record low set in October and November.

The share of respondents saying now is a good time to buy a home was still low, at just 21%, but it was up from 16% in October. The share saying now is a bad time decreased.

On selling, however, sentiment continued to drop. The share of respondents saying now is a good time to sell dropped to 51% from 54%, while the share saying now is a bad time to sell increased.

More consumers now believe home prices will fall in the next 12 months, and more also said they believe mortgage rates will come down.

Prices in November, the most recent measurement, were 2.5% lower than the spring 2022 peak, according to CoreLogic. They were still over 8% higher year over year, but that annual comparison is now half of what it was in June.

The average rate on the popular 30-year fixed mortgage hit a recent high of 7.37% in October but then fell back into the mid-6% range throughout November and into December. As of last Friday it had dropped to 6.2%, according to Mortgage News Daily.

“As we enter 2023, we expect affordability to remain the top challenge for potential homebuyers, as even small declines in rates and home prices — from the perspective of the buyer — may not produce sufficient purchasing power,” said Doug Duncan, Fannie Mae’s senior vice president and chief economist, in a release. “At the same time, existing homeowners may continue to wait to list their properties, since many have already locked in lower mortgage rates, creating minimal incentive to sell and buy again until rates are more favorable.”

That tension will continue to drive home sales lower in the coming months, Duncan said.

Adding to the confidence in housing, the share of consumers who said they were concerned about losing their jobs in the next 12 months dropped from 21% to 17%. Fewer, however, said their household income is significantly higher than it was a year ago.

With the housing market now in its historically slow winter season, some agents are reporting activity is “frozen.” Pending home sales, which represent signed contracts on existing homes, dropped more than expected in November, suggesting that closed sales in January will be lower as well.

Those sellers who are braving the housing chill are offering more concessions: Roughly 42% of sellers did so in the fourth quarter, the highest share in recent years, according to Redfin, a real estate brokerage. That’s up from just over 30% in both the previous quarter and the fourth quarter of 2021, and is higher than the previous high of 40.8%, notched during the three months ending July 2020, at the start of the Covid pandemic.

Other January 9, 2023

Data and Analysis on Wildfires and Insurance

Wildfires are a reality for many Californians, and by analyzing multiple data sets over several years the Department can identify trends affecting the insurance market. Data and its objective analysis have driven actions by Insurance Commissioner Ricardo Lara focused on preserving available and affordable insurance options for homeowners and businesses. As the state regulator, with statewide jurisdiction, the Department can provide unique datasets that promote public understanding of insurance market trends, empowering local jurisdictions and consumers with important statewide or local context for decision-making. The Department collects data from insurance companies, and in some cases directly from California businesses, and makes it available through our public website directly to the public, the Governor’s Administration and Legislature, and other stakeholders. The Department will continue to update this web page as new data and analysis becomes available. Data questions related to this page can be directed to: ClimateStudies@insurance.ca.gov. Policyholders and members of the public may direct questions relating to specific cancellation, non-renewal, or other insurance transactions to our Consumer Services Division Help page.

Residential data: Annual Insurance Policy Count Data

Since 2018, annual counts of new, renewed, and non-renewed homeowners and dwelling fire policies have been collected from admitted insurance companies by the Department to better understand statewide and geographical trends in residential insurance markets facing wildfire risks. Annual counts of California FAIR Plan policies and overall counts of surplus lines policies are also collected. Individual, annually released Nonrenewal Data Fact Sheets are provided below, with the 2019 Fact Sheet including data from 2015-2018.

  • Statewide Data Fact Sheets for new, renewed, and non-renewal data collected by the Department from 2015-2021 provide an opportunity to review multi-year trends for insurance non-renewals and FAIR Plan policy numbers among residential insurance policies.
  • County-level breakdowns of new, renewed, and non-renewal data provide a more specific information for each of California’s counties.
  • ZIP Code-level breakdowns of new, renewed, and non-renewal data.

Statewide Commercial Insurance Data Survey, with an emphasis on agriculture

To inform strategies for increasing the availability of agricultural insurance and additional types of commercial insurance, the Department collected coverage limits, premiums, losses, and claims related to wildfires from admitted insurance companies.

Wildfire Risk Information Reporting

Report and Data File including fire and wildfire related losses, segmented by wildfire risk score, collected from admitted insurance companies every two years. The Report is produced pursuant to California Insurance Code Section 929.

Insurance Companies Offering Home and Community Hardening Incentives

Companies listed in this resource offer pricing incentives for a home hardening actions and community mitigation designations, including actions listed in the Safer from Wildfires Framework.

Find Insurance Companies That Write in Higher Fire Risk Areas

The Home Insurance Finder allows you to search for insurance companies and licensed agents/brokers who have been identified to sell homeowners, renters, condominium, or mobile home insurance. You can narrow your search to insurance companies that may write in higher fire risk areas.

 

 

https://www.insurance.ca.gov/01-consumers/200-wrr/DataAnalysisOnWildfiresAndInsurance.cfm

Buying January 9, 2023

Top 5 U.S. Home Buyer Must-Haves for 2023 Revealed

According to new research, functional outdoor space is the new must-have for 2023 home buyers in the U.S. The evolution of the backyard tops the top five home trends to watch in 2023. Here are the top 5 buyer must-haves for 2023:

Backyards move to the forefront

The humble backyard, once overshadowed by chef’s kitchens and walk-in closets, is the new luxury for today’s home buyers. Backyards are now highlighted in 1 out of every 5 Zillow listing descriptions. Mentions of patios and pools also surged, up by more than 13% and 11%, respectively, in 2022.

“The rising popularity of outdoor features suggests the pandemic has changed the way we want to live for good, priming the backyard for a 2023 evolution,” said Amanda Pendleton, Zillow’s home trends expert. “When the pandemic forced all entertaining outdoors, homeowners reclaimed their backyards from the kids or the dogs. Now they’re rethinking how that space could serve as an extension of their home in new, creative ways.”

In 2023, look for outdoor home gyms, natural pools alive with plants, edible gardens, and outdoor rooms for dining, lounging and quiet reflection.

Kitchen islands get their glow up

Today’s ideal kitchen now includes a spacious island. This hub can seamlessly flex from breakfast bar to homework headquarters to dinner prep station, which is likely why there was a 19% increase in mentions of this multifunctional feature in listing descriptions on Zillow this year.

“As we redefine the spaces in our homes, kitchen islands are being designed to accommodate dining and entertaining activities in the kitchen rather than the formal dining room,” said Kerrie Kelly, creative director at Kerrie Kelly Design Studio. “In 2023, we will see a surge of larger and even double kitchen islands using unique colors and materials.”

Instead of islands blending in with the kitchen, expect to see them stand out in contrasting paint colors or wood stains. Different countertop materials, combination wood and stone worktops, and mixed metal fixtures and hardware will become more common. Look for homeowners to increasingly repurpose unique furniture pieces or vintage tables as islands.

Mirrored walls are back

A mirrored wall or ceiling might conjure up 1970s flashbacks, but this throwback feature is primed to make a 2023 comeback in a modern way. Mirrored surfaces reflect light and can make tight quarters feel more spacious. Today’s mirrored wall is often antiqued and applied in a grid, adding character and an on-trend Parisian feel. Mirrored walls or ceilings are now appearing 12% more often in listing descriptions on Zillow.

Privacy, please

For nearly three decades, contractors have been taking down walls across America as homeowners and builders embraced open concept living. However, the pandemic exposed the fatal flaw of the open floor plan once everyone was living, working and schooling at home: the lack of privacy. A soundless space for video calls or a quiet sitting room for reading became more desirable than ever. More than a quarter of all Zillow listings now mention privacy or private spaces, a 7% increase over last year.

As home buyers and homeowners seek out privacy, calm and quiet, expect the closed floor plan to make a return to style in 2023. Closed floor plans create cozy, comfortable, enclosed spaces within a home, allowing for bold color and design statements in each room. Homeowners who have open floor plans will look to compartmentalize their space through furniture layout and design to create private nooks and corners.

The renovation generation

The youngest homeowners will lead a new wave of the pandemic-era renovation boom. A new Zillow survey finds 48% of homeowners younger than 40 have tapped the equity in their home in the past two years, most commonly to pay for home improvement projects. However, 90% of those homeowners under 40 who took out a home equity line of credit or second mortgage, or opted for a cash-out refinance, have yet to spend all the money they borrowed, suggesting 2023 may be the year they complete all the renovation projects on their to-do list.

Look for this younger generation of renovators to focus on projects that make their homes more sustainable, low-maintenance and high-tech. Investing in drought-resistant landscaping and smart-home systems are energy-efficient projects that can help save money, the environment and boost a home’s value when it’s time to sell.

Buying January 9, 2023

Should I Buy a Home After 60?

While you might not immediately associate retirement with homeownership, buying a home after age 60 can be thrilling and financially savvy. Instead of looking for highly rated school districts, you can find the ideal combination of comfort, affordability and proximity to those who matter most. That said, no matter your circumstances, buying a house as you near retirement age can have a lasting impact on your retirement finances. Here’s what you should consider before buying a house after age 60.

A financial advisor can help you figure out when buying a home makes sense for your financial plan.

Pros of Purchasing a Home After Age 60

Purchasing a home after age 60 can be a wise financial move. Here are four common benefits:

Opportunity to build equity. No matter where you are in life, equity is a powerful financial tool. When your home value rises above the amount left on your mortgage, you’re building equity. For example, if you have a $300,000 home and your mortgage loan balance is $200,000, you have $100,000 of equity.

You can use equity to pay for various needs, such as home repairs, paying off debt, or funding a vacation. In addition, the more equity you have, the more potential profit you’ll make by selling your home. Therefore, building equity gives you financial leverage in numerous situations.

Tax breaks. Homeownership means tax breaks! Depending on your circumstances, you may be able to take advantage of the following:

  • Mortgage interest deduction. If you bought your home before December 16, 2017, you can likely deduct $1 million of interest paid on your mortgage if you’re married and filing jointly. If you became a homeowner after that date, you can deduct $750,000 instead (and deduct half of those limits if you’re married filing separately or single).
  • State and local tax (SALT) deduction. You can deduct a maximum of $10,000 of state and local property taxes annually (half that amount if you’re married filing separately or single).
  • Home improvement interest. As a homeowner, you can borrow against your equity through a home equity loan or home equity line of credit (HELOC) to pay for home improvements. In addition, you can deduct your interest payments on your taxes. This deduction only applies when you use these financial products to pay for home improvements.

Security. Housing is currently in high demand and renters can lose their homes at the whim of landlords or economic instability. On the other hand, if you have a fixed-rate mortgage, your housing payment won’t change after you move in. As a result, homeownership gives you solid financial footing and a consistent monthly housing bill that won’t jump because of market fluctuations.

Establish a legacy to leave behind to your heirs. A well-maintained home is an asset and buying one after age 60 means decades of homeownership for you and future generations. By passing on your home to your heirs, you can provide them a financial foundation from which to build. Housing is usually a family’s largest monthly expense and removing that for your children or grandchildren is a tremendous benefit.

Cons of Purchasing a Home After Age 60

While homeownership after age 60 can bring a host of positives, here are three common drawbacks before signing the dotted line on closing day:

Maintenance and repair costs. A home is an asset and a responsibility. Once you move into a new home, you inherit seemingly limitless chores and tasks: mowing the lawn, cleaning the gutters and getting rid of pests, to name a few. Plus, as you age, you might become unable to get up on ladders or spend hours raking leaves, meaning you’ll pay for these services.

In other words, homeownership brings physical and financial demands for the care of your property. Therefore, saving money for upkeep is essential. It’s recommended to budget 1% to 4% of your home’s value for annual repairs and maintenance. For instance, you might have a $250,000 home. In this case, you would budget $2,500 to $10,000, depending on your situation.

Closing costs. Buying a home is exciting, but closing day can exhaust your savings. For example, you’ll pay for loan origination fees, home inspections, and title insurance during the home-buying process. As a result, you can expect to pay between 3% and 6% of your loan balance in closing costs. Moreover, these expenses are separate from your down payment, meaning you’ll likely need tens of thousands of dollars to purchase a home.

Lack of flexibility when circumstances change. A significant benefit of renting is the lack of commitment. For example, if you want to pick up and move across the country as a renter, you wait for your lease to end (or break it early if you can afford it) and leave your apartment or rental home behind. Once you hand over the keys, it’s a clean break.

On the other hand, homeownership makes it more challenging to pull up your roots at a moment’s notice. Selling or renting out your home takes time, effort, and more money. Therefore, if you like moving frequently, homeownership can be a hindrance instead of a blessing.

Key Considerations When Buying a Home After Age 60

Buying a home after age 60 is a serious financial commitment. Here are three key points to keep in mind when making your decision:

Housing timeline. If you envision spending the next 20 years in your next home, homeownership is likely an excellent move. However, as the number of years you’ll live in the home decrease, the benefits of homeownership decrease. Specifically, living in a home for less than five years after buying will likely nullify the financial gains from tax breaks or increases in home value. As a result, it’s wise to ask yourself what your plan is for the next decade or two. If it involves moving multiple times, a home might be a liability rather than an asset.

Evaluate the real estate market. Your region’s real estate market is unique from the other side of the state or country. For example, urban areas can be more affordable for renters than homeowners. On the other hand, you might find an affordable slice of land in the countryside that perfectly suits you. Therefore, it’s a good idea to weigh your preferences against your local housing market. A high supply of homes and modest interest rates can help make buying a home affordable.

Identify the home that suits you. After age 60, you might want to spend your time on something other than mowing grass or shoveling snow. So, it’s crucial to ask yourself what type of home is realistic to own. Acres of land might be out of the question unless you can afford help taking care of it. On the flip side, a condominium with built-in lawn care can provide comfort and convenience.

Is Buying a Home After Age 60 a Good Idea?

Buying a home after 60 can make sense if you have sufficient monthly income and find an affordable home. In addition, if you’re physically capable of maintaining the home or can pay for extra help, homeownership won’t become burdensome. Lastly, if you have family you’d like to leave the home to, you can enjoy decades of living in a house that will someday belong to your children and grandchildren.

On the other hand, buying a home after 60 can hurt you financially. For example, if you plan on moving in five years or less, the expenses of homeownership will cost more than the financial benefits. Plus, you’ll have to sell or rent out the home when you want to move. As a result, homeownership can incur responsibilities you may not want to shoulder, especially if you’re retired and want to travel.

Bottom Line

Buying a home after age 60 can be a blessing or curse, depending on your circumstances. While you can reap tax advantages and leave a legacy for your family, owning a home is a commitment with definite financial implications. Therefore, evaluating your financial capabilities and your plan for the next few decades can help you decide whether it’s best to put down your roots as a homeowner or become a renter with fewer responsibilities.

Tips for Buying a House After Age 60

  • Homeownership affects your monthly budget and overall financial plan. A financial advisor can help you ensure that buying a home makes sense for your financial plan.
  • Preapproval from your lender is critical to making a serious offer on a home. Without preapproval, sellers don’t know if you have the financial backing necessary to purchase a house. So, before browsing through homes, it’s best to shop around for a lender and submit your financial information (tax returns, W-2s, pay stubs, bank statements, etc.). Once you receive approval, you can make offers with confidence.