Americans Less Attached to Single-Family Homes
A few years ago, the Canton (Oh.) Repository reports, the vast majority of newly constructed homes were single-family detached residences, often with large yards. Today, it’s a different story.
Within the past few years, there’s been a significant swing toward attached units — heavy condo demand as well as townhouse demand. In these units, buyers share walls and areas such as walks, pools, even yards.
The most obvious advantage of an attached home is cost.
The price of a high-quality condo or multi-family home unit is less than a comparable single-family detached home. They are both expensive in today’s market, but attached units are less expensive because per-unit building expenses are split among multiple people and therefore cost less.
Other factors that often appeal to home buyers relate to security, professional management of the property and the freedom to leave their unit unattended for extended periods. Some residents like the community feel of living in this type of complex.
Attached housing was once known as being popular with young, first-time home buyers and retiring baby boomers. Today, it’s becoming the home of choice for buyers of all ages and levels of affluence.
The trend toward attached units in the housing market has reached a point where more than half of all new housing starts in many U.S. real estate markets are attached housing.
HOME EQUITY
Another study of buyer trends found an increasing number of homeowners are obtaining needed cash via mortgage refinancing their existing mortgage.
There’s a very good reason for that trend. A home equity loan or a line of credit is usually tied to the prime rate. Those rates have been increasing significantly, while long-term mortgage rates have remained relatively low.
Homeowners feel the best way to generate needed funds in today’s market is through cash-out refinancing. According to the American Bankers Association, the dollar amount of home equity loans increased by 14.6 percent for the first three quarters of last year.
The number of property foreclosures is dropping, according to a report from RealtyTrac, a real estate research firm. About 109,650 properties entered some stage of foreclosure during the month of December nationally, a fact reflecting a decrease of nearly 9 percent from the previous month.
As Colorado mortgage problems continue to mount, the Rocky Mountain State boasted the nation’s highest foreclosure rate in December. Nevada default rates dropped to second highest in the nation, while Texas recorded the most new foreclosure filings of any state in December.
MORTGAGE ‘SUITABILITY’
A new “suitability standard” law has been proposed by Rep. Barney Frank, D-Mass., new chairman of the House Financial Services Committee. This new law would require mortgage providers to grant loans only to applicants who are clearly in a position to make their monthly payments.
The law would require a loan officer to make certain that applicants are financially capable of handling a requested home loan before and after their payment increases, and that they fully understand every pertinent element about the loan they select.
The Mortgage Bankers Association takes a dim view of the proposal.
“Making a mortgage lender responsible for determining which mortgage loan is suitable for a borrower will limit consumer choice and could deepen the slowdown in the housing market,” said Kurt Pfotenhauer, MBA’s senior vice president of government affairs.
“After 25 years of the industry developing increasingly sophisticated and objective underwriting standards,” he added. “Such a suitability standard would turn back the clock on fairness in lending by virtually requiring mortgage company subjectivity in the lending decision.”
50-YEAR MORTGAGE
Last year, the 40-year fixed-rate mortgage became increasingly popular with borrowers, primarily marginally qualified home buyers. Predictably, a 50-year mortgage is now being offered by lenders and mortgage brokers.
This is very close to being an interest-only mortgage, but it’s not quite - the rate of amortization is very slow, particularly in the early years of the term.
It helps some people qualify for needed financing for the purchase of a high-priced, much-desired home, and lower monthly payments make it possible to buy a more expensive home than they could otherwise.
SOURCE: Canton Repository