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Realtor Market Insider November 29, 2021

November 29th, 2021 9:52 AM by Richard Sardella MLO.100007700/NMLS 233568

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(by Sigma Research)
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Nothing is forever, including what older Americans call home.

It seems millennials are not the first generation to live “in the moment.” Boomers and those slightly younger are finding it no great loss to change their minds about their “forever homes” to something smaller, different, or even in an alternate locale.

Wall Street Journal’s Beth Decarbo reports on how many couples near or in retirement embark on a quest to find the perfect place to spend their twilight years, but go on to realize that what’s perfect now may be less than ideal later. “Poor health and dwindling finances are obvious reasons some seniors choose to move,” says DeCarbo. “Other retirees retool their priorities when they realize how much they miss the grandchildren or hate their new neighborhood.”

Because, life. It just happens. And most home buyers don’t stay in their homes as long as they think they will, according to Jessica Lautz, vice president of demographics and behavioral insights with the National Association of Realtors. The survey, released earlier this year, asked recent home buyers to list factors that would compel them to move. Marriage, birth, or retirement were cited as the top reason by 25% of the respondents aged 56 to 65 and 16% of respondents 66 to 74. “The second-most common reason was a household member’s health, cited by 14% of respondents 56 to 65 and 25% of those 66 to 74,” says deCarbo. “The third top reason, for both age groups, was downsizing to a smaller house.”

Moving even every few decades, however, carries a big price tag, which is why some experts urge buyers to learn as much as they can about a new location before shelling out for a home. DeCarbo quotes Mike Leverty, a Wisconsin-based financial advisor: “It’s OK to take a couple of years to explore other areas and not jump in immediately.” He advises his clients to rent in the area where they think they want to live, even if it is only part time. “You really have to view it as a second home and not a vacation,” he says. “Factor in amenities like shopping and healthcare—things you wouldn’t think about if you just vacationed there for a couple of weeks.”

To illustrate this point, DeCarbo tells the story of a couple that had found what they thought was their first forever home in Southport, N.C., and paid about $200,000 for land and another $400,000 to build the house. But the nearest big city was more than 30 minutes away, and they began to feel isolated after having been accustomed to good restaurants and nearby theaters.

The couple subsequently took a trip to Asheville, N.C., for a tennis tournament, after which they realized Asheville offered the best of both worlds—the trappings of city life and the outdoor activities in the beautiful Blue Ridge Mountains. So, they sold their Southport home for $480,000 in 2016. The casualty of all this was getting clobbered on the purchase price of the lot, the value of which had fallen about 50% since they bought it.

After the couple built their second forever home, they took part-time jobs, volunteered and pursued their hobbies. Despite loving the area, however, they had a tough time breaking into the social arena. So they began to be open to yet a third forever home possibility. Their current forever home is located in a sprawling 55+ community in central Florida, where they now golf, and play softball and pickleball, among other pursuits, including fostering puppies.

The couple insists they have no regrets, however, and that their past home-buying adventures were valuable because they led them to where they are now. Will they stay put? No guesses.

Other retirees leave what they once believed was their forever home because the cost of living in their locale has begun to skyrocket. Then, when they experience the weather or location they chose next was less than optimum, they’ll move yet again. They’ll swear no one told them about freezing winds, intense storms, nothing in common with the residents there, or the political persuasions not at all matching their own.

Downsizing sounds great at first. Kids go off to college, get married, or move away and older homeowners feel they are wandering around listening to the echoes of their own footsteps. So perhaps they move closer to town, where they were willing to live in less square footage with no yard, but at a higher price per square foot. Now they pay less per year in taxes, upkeep, utilities and lawn care. But do they commit? Not always. They may have purchased a house with stairs they no longer wish to scale or one too far from the grandchildren who didn’t exist when they downsized. And they move yet again.

In the end, sometimes a forever home is not forever.


This Week's Mortgage Rate Summary

How Rates Move:

Conventional and Government (FHA and VA) lenders set their rates based on the pricing of Mortgage-Backed Securities (MBS) which are traded in real time, all day in the bond market.  This means rates or loan fees (mortgage pricing) moves throughout the day, being affected by a variety of economic or political events.  When MBS pricing goes up, mortgage rates or pricing generally goes down.  When they fall, mortgage pricing goes up.  Tracking these securities real-time is critical.  For more information about the rate market, contact me directly.  I’m among few mortgage professionals who have access to live trading screens during market hours.

Rates Currently Trending: Higher

Mortgage rates are moving higher today. The MBS market improved by +9 bps last week. This was not enough to improve mortgage rates or fees. The market experienced high volatility last week.

This Week's Rate Forecast: Higher

Three Things: These are the three areas that have the greatest ability to impact rates this week. 1) Covid, 2) Jobs and 3) The Fed.

1) Covid: We saw a huge (+74BPS) gain on Friday due to news of the new Omicron variant. Besides the obvious health concerns, the markets are focused on the potential for renewed lockdowns, travel restrictions and overseas factory closures which could provide a very strong headwind to our economic recovery.

2) Jobs: We have a large plate of job and wage related data to digest this week which will culminate in Big Jobs Friday with the Unemployment Rate, Non Farm Payrolls and most importantly, Average Hourly Earnings.

3) The Fed: We will hear from several major Central Bankers this week. We hear from our own Fed Chair Powell on Tuesday and get our Beige Book on Wednesday. The bond market will continue to struggle with trying to handicap what the Fed may or may not do to the pace of the Taper at the December FOMC meeting.

This Week's Potential Volatility: High

This morning we're seeing a step back from Friday's panic buying. Volatility is high as markets keep an eye out for news on Omicron.

Bottom Line:

If you are looking for the risks and benefits of locking your interest rate in today or floating your loan rate, contact your mortgage professional to discuss it with them.

About Richard Sardella

Richard Sardella has been actively managing and providing services in the mortgage industry for over 27 years. Richard serves on the board of directors as President of Colorado Home Mortgages Inc.

About This Report And Disclosure Information

All information furnished has been forwarded to you and is provided by thetbwsgroup only for informational purposes. Forecasting shall be considered as events which may be expected but not guaranteed. Neither the forwarding party and/or company nor thetbwsgroup assume any responsibility to any person who relies on information or forecasting contained in this report and disclaims all liability in respect to decisions or actions, or lack thereof based on any or all of the contents of this report.

MLO of record MLO.100007700 / NMLS#233568 / CHM NMLS#127716.

Posted by Richard Sardella MLO.100007700/NMLS 233568 on November 29th, 2021 9:52 AM



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