New Construction Buyers Spend Less Time Searching For a Home in 2020

 The Zillow Consumer Housing Trends Report for 2020 had big changes from the data reported in 2019. New construction (NC) buyers that were surveyed for the 2020 report revealed that they spent less time looking for a home because they focused only on a new construction home. The report showed that 23% more NC buyers found their home in less than four weeks. In fact, the average new construction buyer spends only two months searching for a newly built home.

More and more home buyers are desiring a new construction home now more than ever. Builders are marketing off this change by adding incentives such as free builder upgrades. In 2019 9% of NC buyers said free builder upgrades was one of the top three of their reasons for buying new construction while in 2020 14% cited this as one of their motivators.

The top reasons for purchasing a certain home are still location and home features but following close behind now is the desire to purchase a new home that has never been lived in or used. Buyers want to be able to customize their home features and choose their own floor plan. Thirty-percent of NC buyers cited one of their top reasons for purchasing a newly built house was because it was the best value for their money.

New construction buyers are now focusing on less square footage. More NC buyers (9%) in 2020 purchased small homes which were 6 percentage points higher than in 2019. Small homes are homes that are less than 1,000 square feet. The data also informed that 19% of NC buyers paid less than $100,000 for their home in 2020 while only 9% were reported in 2019. Zillow feels that the shift might be because more new construction is being built in urban areas or that home builders are offering more options in smaller homes.

There was also a shift in home feature preferences in NC buyers in 2020. These include rental income, smart technology and space for cars. It became important to 32% of new construction buyers that they could generate rental income by renting out the whole home compared to 23% who said this was important in 2019. Smart home technologies are also becoming the norm. More and more people are becoming comfortable with devices that control things such as security or temperature control. Forty-three percent of NC buyers say that smart home capabilities are very important. Cars are also important to Americans, in fact so important, that 74% of NC buyers have to have off-street parking or a garage and 67% have to have an assigned parking space. Zillow says this probably stems from the higher rate of new construction in urban areas.

The new construction housing market is starved for inventory so if you are in the market, choosing a Realtor is a must. A Realtor can help you find the best home for you and your needs.

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Ways To Purchase a Home With No Down Payment

 Mortgage Rates are low and now is a great time to purchase a home. A big stumbling block for many is a downpayment. There are ways to borrow money through government-backed loans that give a borrower a chance to purchase a home with a smaller downpayment or no money down at all.

Lenders are protected when they lend borrowers the money for a home from the three government agencies which are the Federal Housing Administration, the US Department of Agriculture and the US Department of Veterans Affairs. These agencies ensure loans allowing lenders to reduce the risk of lending a loan to those who offer a low or no down payment.

"The goal across all these programs is helping people get into a home, knowing that homeownership is a key driver for removing the wealth divide," said Ed Barry, chief executive of Capital Bank, a bank headquartered in Rockville, Maryland, which operates Capital Bank Home Loans. "These programs are out there, but many people don't even know that they qualify."

An FHA loan allows a buyer to obtain a mortgage with a lower credit score, higher debt-to-income ratio and smaller down payments. In fact, it is easier for a home buyer to qualify for an FHA loan vs a conventional mortgage.

There is however a limit to the amount you can borrow on an FHA loan. This year the caps range between $356,362 and $822,375 and also depend on the location of the property. In order to find out the cap for your area, you can visit the Department of Housing and Urban Development website.

If you are a veteran or a surviving spouse of a veteran, then you will be eligible for a VA loan. VA loans offer 100% financing and better terms than a conventional loan.

"The advantage of the VA loan is the option to make no down payment," said Jordan Nietzel, a certified financial planner and founder of Trek Wealth Planning in Kansas City. "The thing that people need to watch out for is the debt-to-income ratio, which can go higher on a VA loan than a conventional loan. It can qualify you for a higher loan than you may be prepared to handle."

One catch is the VA funding fee. For a home purchased at $200,000 with a 5% down payment of $10,000, the VA funding fee will cost $3,135 or 1.65% of the $190,000 loan amount. The lower interest rate on a VA loan will be worth the VA funding fee.

In a rural area, there is a loan program called the USDA loan which allows for 100% financing with no down payment. These are great for low and moderate-income households. The buyer's household income cannot exceed 115% of the median income of the area around the home.

There are also property requirements for a USDA loan. The loan eligibility is based on the population density of the community. A potential buyer can search for USDA-eligible areas on the USDA website.

"People tend to think a USDA loan is for farmers," said Barry. "That isn't the case. It is designed for rural purchases. But that is defined by population density, not agricultural use. So you have eligible areas even 30 miles out of Washington DC."

"The challenge is finding someone who is knowledgeable in this space," said Barry. Not only about the type of loan, but about the areas where you are looking. "Usually this is more than just a transaction. It can be a super complicated process. A little hand holding is helpful."

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Affordable Housing Funds Receive $1 Billion

 The current housing market is on fire and will have even more support with the $1.09 billion disbursements for Fannie Mae and Freddie Mac. The Federal Housing Finance Agency (FHFA) has never authorized such a large amount. In fact, this is double what was given last year.

The Federal Housing Finance Agency (FHFA) was established in 2008. The goal for the agency is to make sure that regulated institutions make good on their commitment. It is also there for a safe place for liquidity and funding for the housing finance market throughout the economic cycle.

Along with the agency, as part of the Housing and Economic Recovery Act (HERA) of 2008, congress created the Housing Trust Fund (HTF) and Capital Magnet Fund (CMF). Their purpose is to support affordable housing. HERA directed the Enterprises to set aside 4.2 basis points of each dollar of unpaid principal balance of its total new business purchases and then allocate those reserved funds following each fiscal year for. The funding is divided with the HTF receiving 65% and the CMF receiving 35%.For 2021 more than $700 million will be given to the U.S. Department of Housing and Urban Development (HUD) and the Department of the Treasury for the CMF will receive $383 million.

This is good news for the housing industry altogether. Now is a great time to purchase a home if you are in the market or thinking of buying a home.

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December 2020 Saw the Largest Gain in Home Prices in 7 Years

The end of 2020 was chaotic with the pandemic mixed with the holidays. This did not slow down the housing market, especially when it came to increases in home prices. It was reported that home prices rose at the fastest pace we have seen in seven years.

The S&P CoreLogic Case-Shiller Home Price Indices reported that nationally home prices rose 10.4% over the data collected in December 2019. Not only were the home prices rising at a record pace, but we saw the largest annual gains in the more than 30-year history of the index in December 2020.

“2020′s 10.4% gain marks the best performance of housing prices in a calendar year since 2013,” said Craig Lazzara, managing director and global head of index investment strategy at S&P Dow Jones Indices. “From the perspective of more than 30 years of S&P CoreLogic Case-Shiller data, December’s year-over-year change ranks within the top decile of all reports.”

The strongest gains were seen in Phoenix, Seattle and San Diego among the total cities surveyed. Phoenix showed a 14.4% increase year-over-year, Seattle had a 13.6% increase and San Diego was not far behind with a 13% increase.

COVID-19 has driven demand in homes because of the stay-at-home orders. People are more concerned with their homes now more than ever. A lack of inventory and the record low mortgage rates has made the current housing market very strong and desirable.

“These data are consistent with the view that Covid has encouraged potential buyers to move from urban apartments to suburban homes. This may indicate a secular shift in housing demand, or may simply represent an acceleration of moves that would have taken place over the next several years anyway,” Lazzara said.

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2020 National Green Building Standard: Understanding Land Use Updates

 The ICC 700-2020 National Green Building Standard® (NGBS), had important updates to a couple of key sections regarding land use and housing development. According to the National Association of Home Builders, it is important for builders to take notice of these changes. Although there is continuity from the 2015 NGBS in many areas, understanding the changes and new offerings will enable developers and builders to determine the compliance path that works best for their project.

In Section 4 of the 2020 National Green Building Standard site design and development are defined. This section will give points for sustainable land development that is ultimately planned for residential construction. This section was created to help reduce detrimental environmental impacts by enhancing the natural features and improving the quality of the site.

A builder can earn between one to four stars for the number of points earned by the certification defined in Section 4. In the spring 2020 edition, changes were made to Subsection 403.6 Landscape Plan, Subsection 403.7 Wildlife Habitat and Subsection 405.11 Insect Mitigation.

Subsection 403.6 Landscape Plan allows up to an additional 28 points. The new categories in the 2020 update include points for spray irrigation and third-party qualified water-efficient grasses. An example is Turfgrass Water Conservation Alliance (TWCA) which limits water and energy use anywhere turf is planted.

Subsection 403.7 Wildlife Habitat allows up to an additional 6 points. Points are awarded on the design of sites abutting wildlife corridors, fish and game parks, or preserved areas. An example of this would be the outdoor lighting that would be close to the wildlife habitat.

Subsection 405.11 Insect Mitigation is a new category that has been added to the 2020 NGBS. A builder can receive up to 19 points for landscaping that helps reduce insect-borne disease.

Section 5 includes lot design, preparation and development. The points earned in this section have increased in the 2020 NGBS in subsection 503.1 Natural Resources, 503.4 Stormwater Management and 503.5 Landscape Plan to 19 points. Also, the following subsections have been added in 2020, 505.7 Multi-Unit Residential Compressed Natural Gas (CNG) Vehicle Fueling which allows 4 points, 505.8 Street Network gives an additional 5 points and 505.10 Exercise and Recreational Space gives up to 9 points.

Other notable changes made between 2020 and 2015 NGBS are that 2020 verifies practices via the Environmental Protection Agency, the International Wildland Urban Interface Code and the Turfgrass Water Conservation Alliance (TWCA). The 2020 National Green Building Standard® is a great tool for builders to work with and helps improvements on the development of land and lots. The standards give builders and land developers the flexibility needed to develop land and lots that are sustainable, cost effective and appropriate for their geographic location.

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New Challenges For New Home Construction

The housing market began with a bang in 2021 but with the demand for new homes came some uncertain challenges. Builder's confidence is strong with such buyer's high demand. The shortage in home inventory and low mortgage rates coupled with buyer's high interest and a new generation of buyers hitting their peak home-buying years makes for a great time for new home construction.

Zillow reported in their New Construction Consumer Housing Trends Report 2020 that 40% of those buyers who purchased a new construction build, were only interested in buying a new construction home. On the negative side, these new construction buyers hit more obstacles this year than in the past.

Close to half (45%) new construction buyers are under 40 years of age and 70% of new construction home buyers are first-time home purchasers. This shift in demographics has changed what a first-time home buyer might find challenging and what this demographic might struggle with.

This young generation struggled with several top challenges during the purchasing process. A fair price for a home seems to be a challenge. It was sighted that 30% of new construction buyers found that determining a fair price for a home was hard in 2019 and this rose to 37% in 2020. Many blame COVID-19 for this reason. The transaction of coordinating the build of a new home with the sale of their current home was also hard to handle for 36% of new construction home buyers.

The relationship between the sales agent and the home builder has become extremely important. In 2019 84% of new construction home buyers relied on their sales agent to communicate with the builder. In 2020 this rose to 90% which was a 17 point increase over last year.

Challenges can be overcome with help from a Realtor. A Realtor can help a buyer with pricing and financing. They can also be a great mediator between the buyer and home builder. A professional sales agent will help both the building process and purchasing process become an easy streamlined process.

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The Celebration Must Go On... Mardi Gras During COVID 19

 St.Tammany is keeping Mardi Gras 2021 alive this year in a special kind of way. Two Northshore krewes spread the "house float" idea that a New Orleans resident originated. Megan Boudreaux, an insurance agent in New Orleans, came up with the idea to keep Mardi Gras going through decorating her house as a float. She posted on social media to share her idea with a few friends and the idea spread from local New Orleans up to the Northshore and now has made its way to parts of Alabama and Mississippi.

“Everyone loved the idea and wanted to jump in to make their own house floats,” she said. “A shop owner decided to call her theme Yardi Gras, and it just exploded from there.”

The idea has been making its way through neighbors and friends who have been decorating their homes and office buildings to resemble floats. Many residents are also decorating their yards calling it Yardi Gras and for animal lovers, Mardi Paws is decorating doghouses and will have an animal costume competition.

Covington residence Gina and Buddy Campo decided to decorate their house as a part of the "Northshore House Floats" and Covington-centric "Rollin' on the Three Rivers" krewes. The Northshore House Floats theme is special vacation spots so the Campo's decked their home with a Jamaican flare calling it "Jamaican Me Crazy."

To keep with their Jamaican theme, they created a thatched roof dog hut in honor of their three doodles Bourré, Dani and Gabbie Roux. The three were dressed up and photographed for the Mardi Paws' Mardi Gras Costume Competition.

The community wants to lift Carnival spirits and is doing a great job of keep Mardi Gras alive this year.

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