View Source

Going on a Scavenger Hunt to Finish Your Kitchen Renovation

Cara Fox, an interior designer in Salt Lake City, has trekked out to Orange County, Calif., six times over the past several years in search of high-end discards. She comes back with truckloads of materials that she repurposes, like a farmhouse table that she turned into a laundry-room island for a client. “Find these high-end ZIP codes where people are constantly remodeling every five years and they’re getting rid of really good stuff,” she said.

Ms. Fox, the principal designer at the Fox Group, often puts the word in with contractors, telling them what she’s looking for. When they come across an item she might like, she quickly snatches it up — arriving and taking the material before they dispose of it. “If you take the work off their plate, you can get a lot of salvaged pieces for free,” she said.

But as an ordinary homeowner with no personal contacts in the building trades, the idea of calling up a contractor and begging for tiles seems strange. I asked Jack Finn, a contractor in Montclair, N.J., who regularly takes on six- and seven-figure projects, whether he ever passes off luxury goods to eager homeowners. “It’s unrealistic,” he said of the idea of a homeowner coming to take, say, a farmhouse sink or a set of wooden cabinets. “It’s like used clothing — you wouldn’t have people coming into your closets” to pick through the castoffs.

Mr. Finn currently has a client who bought a window, but then decided he wanted a door for the space instead. It’s a perfectly good window, but Mr. Finn doesn’t have the time to find someone to take it. “It’s too much trouble and too much organization,” he said.

Even a charity organization like Renovation Angel, which resells luxury kitchens, is not a realistic option for the lone window. While Mr. Finn has made arrangements for the nonprofit to come to his job sites in the past to remove cabinetry, it no longer takes single-item donations (for the most part). Instead, it first assesses potential donations and accepts entire kitchens — cabinets, appliances and countertops — disassembling the materials and reselling them as sets. It also sells luxury bathroom and kitchen fixtures and appliances individually, like Thermador and Viking ranges or Waterworks faucets.

For people like me, the Renovation Angel showroom in Fairfield, N.J., is a potential jackpot, which is how I ended up there earlier this month, wandering the vast space looking at other people’s oven hoods, refrigerators and cabinets in search of something that might help keep my budget in check.

I still haven’t found it, but I’m sure it’s here somewhere.

For weekly email updates on residential real estate news, sign up here. Follow us on Twitter: @nytrealestate.

View Source

The North Fork Has Its Own Market Moment

Yet many came to like the area and decided to stay, often by buying the properties they had rented after their leases ended, which has fueled record-setting waves in the sales market.

Between July and September of 2020, after officials lifted restrictions on house showings, the North Fork saw 236 residential sales (mostly single-family houses) at an average price of $875,000, according to a report by the appraisal company Miller Samuel for Douglas Elliman Real Estate. It was the largest number of deals since the mid-2000s.

More than a year into the pandemic, panic no longer seems to be the main motivator for buyers, and activity has cooled. But high-water marks are still being achieved.

From January to March, there were 181 residential sales at an average price of $1 million, according to the Elliman report, making it the most active winter since 2006. Last winter, in comparison, there were 114 sales at an average of $816,000, according to the report, while winter 2019 saw 110 sales at $741,000.

Some of the deals, which had their closings delayed because of the high volume of transactions, reflect an earlier market. But even current demand is still intense.

On April 30, a house in Southold built in the 1970s with vaulted ceilings, which looked like it needed a little T.L.C., hit the market at $895,000 and quickly attracted 28 showings and 12 bids, said Sheri Winter-Parker of the Corcoran Group, the property’s listing agent. In early May, the house, which has four bedrooms and more than an acre, was poised to go into contract for “hundreds of thousands over ask,” said Ms. Winter-Parker, who added, “It’s been crazy.”

What differentiates the current market from last year’s partly is that the buying spree of the last few months has put a major dent in supply. Further tightening inventory, brokers say, is the fact that people who might have otherwise put their homes up for sale before the pandemic decided not to do so.

View Source

The Hamptons Real Estate Sales Boom Continues

The influx of wealthy buyers who have purchased homes in the $1 million range “are changing the complexion of the area,” Ms. Watson added, including a profusion of tear-downs, gut renovations and increased interest in land buys.

On the upside, revenues from a 2 percent Preservation Tax on Southampton home sales of $250,000 or more is up 40 percent over last year, Mr. Schneiderman said. Funds are used to buy undeveloped land to keep it open, and to buy development rights so farmers can continue to farm. “It has been very successful in terms of preserving our rural character,” he said.

The “silver lining” for owners of more modest homes who might want to cash out and take their windfall elsewhere, Ms. Watson said, is that it is “the time to sell.”

From April to June last year, Greg D’Angelo, a custom builder, leased his rental property — a small house with a pool on a postage stamp-size lot in Sag Harbor — for close to $80,000 to a family escaping the city. “That was our last hurrah,” Mr. D’Angelo said. In January, concerned that the Covid eviction moratorium could make it impossible to evict unsavory renters or squatters, he sold the house for $1.5 million. “It was the market that drove us to sell it,” he said. “I got crazy money for it.”

Though the market usually slows down before Thanksgiving and picks up in February, this year “we went right through the holidays doing deals,” said Gary DePersia, an associate broker with Corcoran. “A lot of inventory that was on the market for years is gone.”

On Shelter Island, a 10,000-square-foot gambrel-style house with a 150-foot dock on Peconic Bay closed for $9.1 million last month after sitting on the market, initially at $10.9 million for two to three years. “That’s a niche market,” Mr. DePersia said. “A rising tide lifts all ships.”

View Source

Instant Reaction: Mortgage Rates, May 13, 2021

“Mortgage rates dropped further this week although the 10-year Treasury yield rose in response to higher inflation. Specifically, the 30-year fixed rate mortgage fell to 2.94% from 2.96% the previous week. With the job market adding fewer jobs than expected in April, mortgage rates continued to stay below 3%. Nevertheless, expect rates to increase in the rest of the year. NAR forecasts the 30-year fixed rate mortgage to average 3.2% by the end of the 2021.

Although mortgage rates may rise in the following months, homebuying activity won’t likely be affected. Keep in mind that rates are hovering into record lows and they will remain historically low for a longer period. Nevertheless, due to low mortgage rates and favorable demographic trends, current homebuyers are having difficulty in finding a home to purchase as there are not enough homes for sale and there are many buyers for the same home. As a result, home prices continue to surge at record highs in many areas across the country.

Take a look here how many homes a household earning $100K can afford to buy now versus 2 years ago.

Table: Mortgage Rates, May 13, 2021

Thus, due to weaker affordability and lower inventory, there are about 450,000 fewer homes available for sale that this household can currently afford to buy compared to 2 years earlier.

While we have underbuilt for more than a decade, in the wake of the housing crisis of 2008, millions of homes that were once owner-occupied became rental units, further dropping the number of homes for sale today. In fact, from 2005 to 2019, the number of single-family houses that are rented grew by over 3.1 million. Typically when families renting a single-family home move to another residence, another renting family moves in the house they leave, while most owner-occupied homes are sold to another owner occupant when the first owner moves away. There are currently 1.7 million homes that are renter occupied. Thus, the conversion of a single-family home from owner-occupied status to rental status has major implications on the number of homes available for sale in the future.”

View Source

How Real Estate Blew Up in the Hamptons and Greenwich

Real estate is booming almost everywhere amid the pandemic, but the gains in local housing markets are far from equal. Two wealthy New York City satellites, the Hamptons and Greenwich, Conn., are quickly outpacing their neighbors in sales volume — a development that isn’t as predictable as you might think.

“Since the pandemic lockdown ended, both markets have been on a tear, seeing record sales levels and price growth,” said Jonathan Miller, of Miller Samuel, the appraisal company.

In the first quarter of 2021, the number of property sales over $5 million in Greenwich increased 400 percent year over year, from five to 25; sales between $1 million and $5 million were up about 90 percent. In the Hamptons, the corresponding segments were up 24 percent and nearly 83 percent over a year.

up about 31 percent over a year in both Greenwich and the Hamptons in the first quarter of 2021 — could make these homes harder to sell a couple of years down the road if demand fades.

For weekly email updates on residential real estate news, sign up here. Follow us on Twitter: @nytrealestate.

View Source

Single-Family Home Prices Rose in 99% of Metro Areas in 2021 Q1

The National Association of REALTORS® reported that the year started off with strong home price growth for the first quarter of 2021. Prices continued to rise, with 89% of the markets showing double-digit home price appreciation. National median prices rose 16.2% year-over-year to $319,200.

Monthly mortgage payments on a single-family home this quarter increased to $1,067 compared to $995 from a year ago. Qualifying median family incomes rose to $51,216 compared to first quarter of 2020, which was $47,760. The effective 30-year fixed mortgage rate decreased to 2.93% in the first quarter of 2021 compared to 3.57% one year ago.

Knowing the mortgage rates and the qualifying incomes for down payments will help potential homeowners figure out which metro areas are affordable for them.

Here is a look at the metro areas with the strongest price growth in the first quarter of 2021, as well as a look at the yearly change in median existing single-family home prices among the top five highest- and lowest-growth metro areas of the first quarter of 2021.

These are the top five single-family metro areas with the highest home price appreciation:

Bar chart: Top Five Metro Areas With Highest Year-Over-Year Home Price Appreciation

These are the bottom five single-family metro areas with the slowest home price appreciation:

Bar chart: Bottom Five Single-family Metro Areas with Lowest Year-Over-Year Home Appreciation

These are the most expensive metro areas for the first quarter 2021:

Bar chart: Five Most Expensive Single-family Markets

These are the least expensive metro areas for the first quarter 2021:

Bar chart: Five Least Expensive Single-family Markets

Qualifying Income Based on Sales Price of Existing Single-family Homes for Metropolitan Areas by Region

For the U.S., at the 5% down-payment threshold, the qualifying income amount for the first quarter of 2021 was $60,819. At the 10% down-payment mark, the qualifying income was $57,618 and with a 20% down-payment, the income required to qualify for a mortgage was $51,216. The West led all regions with the highest qualifying income while the Midwest had the lowest income for 5%, 10% and 20% down payments on a single-family home.

Bar chart: U.S. and Regional Qualifying Income Based on Sales Price of Existing Single-family Homes

View Source

Housing Affordability Increases in March as Incomes Surge

At the national level, housing affordability increased in March compared to a year ago, according to NAR’s Housing Affordability Index. Affordability declined in March compared to February as median family incomes jumped by 16.9% while the monthly mortgage payment increased 7%. The effective 30-year fixed mortgage rate1 was 3.13% this March compared to 3.51% one year ago, but the median existing home sales price rose 18.4% from one year ago.

Line graph: Housing Affordability Index, March 2020 to March 2021
Line graph: Median Family Income, March 2020 to March 2021

As of March 2021, the national and regional indices were all above 100, meaning that a family with the median income had more than the income required to afford a median-priced home. The income required to afford a mortgage, or the qualifying income, is the income needed so that mortgage payments account for 25% of family income.2 The most affordable region was the Midwest, with an index value of 228.0 (median family income of $94,223 which is more than twice the qualifying income of $41,328). The least affordable region remained the West, where the index was 124.1 (median family income of $102,663 and the qualifying income of $82,752). The South was the second most affordable region with an index of 181.9 (median family income of $87,224 and the qualifying income of $47,952) The Northeast was the second most unaffordable region with an index of 176.9 (median family income of $108,009 with a qualifying income of $61,056).

Bar chart: U.S. and Regional March Housing Affordability, 2021 and 2020
Bar chart: U.S. and Regional Median Family Income and Qualifying Income

Housing affordability3 increased from a year ago in three of the four regions. The Northeast had the only decline, of 1.4%. The Northeast region experienced the strongest price growth compared to a year ago, of 24.3%. The West region had the biggest gain of 8.2% and had the second strongest price growth, of 18.5%. The Midwest had an increase of 7.5% followed by the South with the smallest gain, of 5.3%.

Affordability is up in all four regions from last month. The Northeast had the biggest gain of 6.2%, followed by the West, which rose 4.3%. The South region increased 2.2%, followed the Midwest region, with the smallest increase of 0.4%.

Nationally, mortgage rates were down 38 basis points from one year ago (one percentage point equals 100 basis points).

Compared to one year ago, the monthly mortgage payment rose to $1,147 from $1,016, an increase of 12.9%. The annual mortgage payment as a percentage of income declined to 14.4% this March from 14.9% from a year ago due to higher incomes and lower interest rates. Regionally, the West has the highest mortgage payment to income share at 20.2 % of income. Home prices in the West have reached an all-time high of $502,800. The Northeast had the second highest share at 14.1%, followed by the South, with their share at 13.7%. The Midwest had the lowest mortgage payment as a percentage of income at 11.0%. Mortgage payments are not burdensome if they are no more than 25% of income.4

Bar chart: U.S. and Regional Mortgage Payment as a Percent of Income, 2021 and 2020

Home prices are rising which is hurting affordability, keeping out first-time home buyers even with higher incomes. This week The Mortgage Bankers Association reported a decline in loans in forbearance. Last week the Mortgage Bankers Association reported mortgage applications decreased 0.9% from one week earlier. Mortgage credit availability was up 0.6 in March. New home purchase applications are up 7% compared to a year ago.

What does housing affordability look like in your market? View the full data release.

The Housing Affordability Index calculation assumes a 20% down payment and a 25% qualifying ratio (principal and interest payment to income). See further details on the methodology and assumptions behind the calculation.

1 Starting in May 2019, FHFA discontinued the release of several mortgage rates and only published an adjustable-rate mortgage called PMMS+ based on Freddie Mac Primary Mortgage Market Survey. With these changes, NAR discontinued the release of the HAI Composite Index (based on 30-year fixed-rate and ARM) and starting in May 2019 only releases the HAI based on a 30-year mortgage. NAR calculates the 30-year effective fixed rate based on Freddie Mac’s 30-year fixed mortgage contract rate, 30-year fixed mortgage points and fees, and a median loan value based on the NAR median price and a 20% down payment.

2 The 25% mortgage payment to income share takes into consideration that a homeowner has other expenses such as property insurance, taxes, utilities, and maintenance, so that total housing expenses are no more than 30% of income. Housing costs are not burdensome if they account for no more than 30% of income.

3 A Home Affordability Index (HAI) value of 100 means that a family with the median income has exactly enough income to qualify for a mortgage on a median-priced home. An index of 120 signifies that a family earning the median income has 20% more than the level of income needed pay the mortgage on a median-priced home, assuming a 20% down payment so that the monthly payment and interest will not exceed 25% of this level of income (qualifying income).

4 Total housing costs that include mortgage payment, property taxes, maintenance, insurance, and utilities are not considered burdensome of they account for no more than 30% of income.

View Source

What $450,000 Buys You in Wisconsin Florida and Kentucky

This property is in the Highlands, an area southeast of downtown known for high-end restaurants and shops and a particular embrace of nightlife. “Handcrafted leather goods stores, karaoke bars, bookstores, bakeries,” rattled off the listing agent for the property, giving the sense that she was just getting started. Cherokee Park, with its scenic trails and nature preserve, can be reached in less than 15 minutes by bike.

Size: 2,834 square feet

Price per square foot: $159

Indoors: The front of the main house reflects its Craftsman origins, with hardwood floors with inlaid borders, dark wood molding around mullioned or stained-glass windows, a brick living room fireplace with a decorative-tile hearth and gas insert, and bookshelves that flank the wide opening between the living and dining rooms.

The back of the house has been renovated, with an open kitchen containing white cabinets with granite and oak countertops and a breakfast bar that partially divides the space from a sitting room. That sunny area was created by enclosing a porch.

A staircase with Craftsman details (tapered newel post, cutouts in the flat spindles) takes you to the two second-floor bedrooms, which face each other across a hallway; both have hardwood floors, dark doors and trim, and a closet (one is walk-in). The bedrooms share a bathroom with a pedestal sink and a combined tub and shower. There is also a half bathroom near the kitchen, off a landing between the main floor and basement.

Two years ago, the sellers built a two-story building on the foundation of the garage for use as an artist’s studio. It has a sunken living room with the original concrete garage floor, a half bathroom plumbed for a shower (it just awaits tiling), a full kitchen with a gas range and farmhouse sink, and a large, second-floor bedroom or work space with metal pendant lights hanging from a ceiling beam.

Outdoor space: The house is set back on its grassy lot and includes a deep, covered front porch and a fenced backyard. The studio building is at the foot of the backyard, with entrances from there and from a rear alley. There is one off-street parking space next to the studio building.

Taxes: $2,989 (2020, based on a tax assessment of $217,560)

Contact: Anne Hayden, Joe Hayden Real Estate Team, Re/Max Properties East, 270-312-3132;

For weekly email updates on residential real estate news, sign up here. Follow us on Twitter: @nytrealestate.

View Source

Instant Reaction: Consumer Price Index, May 12, 2021

“Inflation rose more than expected in April to the fastest pace since 2008. Over the last 12 months, inflation rate rose 4.2%, compared to 2.6% in March and 1.7% in February, respectively. In the meantime, economists and policymakers typically pay close attention to core inflation, which is the overall inflation rate excluding Food and Energy. In April, core inflation also rose to 3.0%, well above the Federal Reserve’s 2.0% core target. Nevertheless, remember that the Fed has reassured that it will allow inflation to run above the 2% goal since it has been below that target for more than a year.

We pointed out multiple times that inflation would have higher readings especially for the period from March through May due to the base effect. Last year, prices were weak as nearly all states were under pandemic-related restrictions. The Fed anticipates this pickup in inflation will be temporary. Nevertheless, the Consumer Price Index (CPI) also rose more than expected in the month-over-month figures, adding concerns about higher inflation for a longer period. Thus, inflation is one of the economic indicators that will be closely monitored for the next several months.

In the meantime, rent growth was flat in April after decelerating — rising at a slower pace — for several months. Rents rose by 1.8% over the past 12 months to April at the same pace as in March. This could also mean that we may see rent growth pick up in the following months, meaning that demand for rental homes will likely increase. In contrast, median home prices — not included in the CPI measure — rose by a record-breaking annual pace of 17% to a historic high, with nearly every metropolitan area posting price increases in the first quarter of 2021, according to NAR.”

View Source