Reasons To Buy A Home
Reasons To Buy A Home
Need more reason to buy a home? These cities pay you to do it
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Small towns, big incentives
We all know it costs to buy a home. But what if your city actually helped you with those costs, giving you free land, cash grants and other financial incentives just to move there? In a handful of American towns, that’s exactly what buyers can expect.
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Bills to buy a home
According to Trulia, a number of small and medium-sized towns across the country are using incentive programs to draw in home buyers to the area and improve the local economy.
In Harmony, Minnesota, for example, the city is giving up to $12,000 to anyone who builds a new home in the area. The cash grants help encourage population growth, variety in housing stock and variety of residents. According to Chris Giesen, coordinator for the city’s Economic Development Authority, the grants also lead to a more robust local economy.
“We considered many options and realized that giving away money is preferable to land because the cash is usually put back into the community – you can buy things like furniture, building materials and carpeting locally,” Giesen said.
New Haven, Connecticut also has a cash grant program that offers up to $10,000 toward down payment and closing costs on new homes. For buyers who are city employees, firefighters, police officers, teachers or members of the military, the grants go up to $12,500.
The complete guide to down payment assistance in the U.S.
Bringing in new blood
But it’s not just cash incentive programs that cities are using to bring in new residents. Loup City, Nebraska, for example, is giving away free lots in its new John Subdivision. And when that neighborhood’s full, they’ll do the same in another part of town, according to Dawn Skibinski, executive director of Sherman County Economic Development.
"Next, we move on to develop an alfalfa field!” Skibinski said. “We love to bring new people to the area, and we get a lot of attention from the press – people get very excited when they hear the word ‘free.’ I get two to three calls a week from people who want to take advantage of the program.”
How to buy a house with no money down in 2018
In Niagara Falls, New York, the city is incentivizing buyers with tuition reimbursements – a plan it hopes will attract more youthful residents. The town will pay for up to $7,000 in tuition or student loans, as long as the person rents or buys a home near Main Street. A whopping 73 counties in Kansas will also cover residents’ student debt up to $3,000 per year.
Homebuyers are not bothered by higher rates or taxes, but sellers are
A critical shortage of listings is the No. 1 obstacle, not rising mortgage rates or new tax laws that reduce certain homeowner deductions, especially in higher price ranges.
Nationally, sales of homes priced above $750,000 were up nearly 19 percent from a year ago.
New tax laws limit the mortgage deduction to interest paid on up to $750,000 in debt.
Diana Olick | @DianaOlick
Published 11:46 AM ET Wed, 21 March 2018 Updated 2:11 PM ET Wed, 21 March 2018
Exisiting home sales up 3.0% in February Existing home sales up 3.0% in February
10:11 AM ET Wed, 21 March 2018 | 01:22
Home sales rebounded more strongly than expected in February, and the National Association of Realtors says they could have been even higher if there were more homes for sale.
A critical shortage of listings is the No. 1 obstacle, especially in higher price ranges — not rising mortgage rates or new tax laws that reduce certain homeowner deductions.
In fact, homes sales in the West, where prices are highest, jumped more than 11 percent for the month, and the higher end of the market was very active. Nationally, sales of homes priced above $750,000 were up nearly 19 percent from a year ago. New tax laws limit the mortgage interest deduction. Borrowers can now deduct interest paid on up to $750,000 in mortgage debt. Previously, the limit was $1 million in mortgage debt.
Sales at the lowest end of the market, however, homes priced under $100,000, were down 16.5 percent compared with a year ago.
That is the range where the supply shortage is worst.
Home sales did fall sharply in the Northeast, where property taxes are very high in some states, but the Realtors say that was more due to horrendous weather than anything else.
Realtors polled for the monthly survey said they are hearing very few concerns from buyers about rising mortgage rates or the new tax laws, even fewer concerns than in December, when the tax laws were in final debate. That is not the case for potential sellers.
"The one concerning trend is the interest rate lock effect," said Lawrence Yun, chief economist at the NAR. Sellers are telling agents increasingly that they do not want to move because they will lose the record-low mortgage rate they have locked in.
The February sales figures, however, are based on contracts signed one to three months earlier, when rates hadn't moved higher yet.
"That said, higher rates are actually spurring buyers to step up and lock in with a purchase and a funding rate before they head even higher," said Peter Boockvar, chief investment officer at Bleakley Advisory Group. "This was seen in the weekly mortgage application data [last week] where purchases rose 1.4 percent week to week and 6.2 percent year over year."
Mortgage rates are not historically high today, but they are about half a percentage point higher since the start of this year and are clearly on an upward trajectory.
"Mortgage rates are at their highest level in nearly four years, at a time when home prices are still climbing at double the pace of wage growth," added Yun. "Homes for sale are going under contract a week faster than a year ago, which is quite remarkable given weakening affordability conditions and extremely tight supply. To fully satisfy demand, most markets right now need a substantial increase in new listings."
At an open house in Atlanta, buyers were more worried about finding a home than they were about mortgage rates. Most said the good listings were going under contract extremely very fast.
Lisa Reagan has been looking for more than a year and calls the competition "fierce," in her price range. She is less focused on interest rates.
"I think they're fair now, so I wouldn't want to see them go much higher, but I'm not concerned about interest rates," she said.
The number of homes for sale did increase slightly in February, which always happens as the busy spring market approaches, but supply is still down more than 8 percent from a year ago; supply is up on the high end and far lower on the low end of the market. Homebuilders continue to build higher-end homes as well, because rising costs for land, labor and materials have shrunk their margins for entry-level homes.
Shortage on the lower end is likely why first-time homebuyers pulled back in February. There had been a surge in this cohort last year, but clearly affordability and supply is weighing more heavily on them now.
Sales appear to be flattening now at around 5.5 million units annualized, when they should be closer to 6 million, given the demographics, demand and improving economy.
"To get to those levels, demand needs to stay hot, builders need to continue ramping up new home activity and more sellers need to feel comfortable selling. Threading that needle has so far proven difficult," said Aaron Terrazas, senior economist at Zillow.
MBS RECAP: Bonds Improve Nicely Ahead of 3-day Weekend
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BY: MATTHEW GRAHAM
Decrease Font SizeTextIncrease Font Size Mar 29 2018, 2:46PM
Bond markets closed early today and will be fully closed tomorrow for the Good Friday holiday. It was also "month-end," which can bring in additional compulsory volume from traders who have to make certain trades by the end of the month.
One group of traders certainly already got their fill over the past few days: short-sellers (those betting on rates moving higher). In the face of moderate bond rallies, short sellers were forced to cut bait and close their trades. When it comes to shorts, this is accomplished by BUYING bonds.
That bond buying helped fuel snowball rally momentum this week as lower yields only forced more short sellers to cover. Today suggested they had no intention of "re-shorting" bonds ahead of the 3.5-day weekend. That left bond buyers in control, and allowed the lowest volume trading day of the week to deliver yields to their lowest levels.
It continues to be a risk that this week's rally relies too much on temporary factors. As such, we are on guard for bounce potential early next week. If we DON'T see a noticeable bounce, the entire 2018 narrative will need to be tweaked (and in a GOOD way, for once!).