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Last week’s economic releases included readings on inflation, construction spending and private and public- sector payrolls. Weekly readings on mortgage rates and first-time jobless claims were also posted.

Inflation Meets Fed Goal, Construction Spending Lower

March inflation reached a year-over-year rate of two percent, which is the Federal Reserve’s goal for inflation. Inflation rose by 0.20 percent in March to 0.40 percent; analysts expected inflation to rise 0.50 percent. Core inflation, which excludes volatile food and energy sectors, met expectations with 0.20 percent growth.

Construction spending was lower in March with a negative reading of -1.70 percent. Analysts predicted an increase of 0.50 percent based on February’s one percent increase in construction spending. Construction costs were five percent higher year-over-year, and builders cited long-standing concerns with lot shortages. Tariffs on building materials fueled rising materials costs. Analysts said construction spending remains strong.

Mortgage Rates, Jobs Data Mixed

Freddie Mac reported lower mortgage rates last week as the average rate for a 30-year fixed rate mortgage dropped three basis points to 4.55 percent. Rates or a 15-year fixed rate mortgage were one basis point higher at 4.03 percent. Rates for a 5/1 adjustable rate mortgage averaged five basis points lower at 3.69 percent.

The Federal Reserve’s Federal Open Market Committee elected not to raise the target federal funds rate from its current range of 1.50 to 1.75 percent; when fed rates are raised, private lenders including mortgage banks typically raise home loan rates.

New jobless claims were lower last week with 211,000 new claims filed. Analysts expected 225,000 new claims based on the prior week’s reading of 209,000 new jobless claims.

ADP Payrolls reported 204,000 private-sector jobs added in April as compared to the March reading of 228,000 jobs added. The Commerce Department reported 164,000 public and private sector jobs added in April, which was lower than expectations of 184,000 jobs added. The national unemployment rate for April dipped to 3.90 percent as compared to expectations of 4.0 percent and March’s reading of 4.10 percent.

What‘s Ahead

This week’s economic readings include job openings, mortgage rates and new jobless claims. The University of Michigan will also release its monthly Consumer Sentiment Index.

The closing process for a home purchase is an exciting time. The home is finished, the purchase is ready to be finalized and it’s almost time to move in. The final steps of the closing process ensures both parties are able to meet their requirements and all the paperwork is in place and verified.

The Key Players

There are actually four parties involved in a typical closing: the buyer, the seller, the bank or lender financing the purchase, and the escrow agent. Each has an important role in making sure the closing happens effectively and efficiently.

As is common with most purchases, the buyer is already familiar with the need to have a down payment ready and to be committed to a purchase. Additionally, the buyer will have already worked out the loan approval preliminary reviews and steps with the bank financing the purchase if it is not an all cash purchase.

The Escrow Process

During escrow the purchase is then validated through a number of steps. These include:

• Ensuring the property title is clear of any problems or previous liens (a legal method by which other parties get paid for the seller’s outstanding prior debts).

• Ensuring the property has been appraised and represents the actual worth represented to the bank.

• Ensuring the bank is ready to pay the seller with a payment check and that the buyer has paid any down payment as well. Both payments are put into an escrow account managed by an escrow agent and not to be released until all the purchase requirements are met.

• Ensuring the buyer has been notified, read and has committed by signature to all the purchase documentation necessary to complete the sale. This includes understanding the nature of the home loan, payment responsibilities, and what happens if there is a default.

• Ensuring any property taxes, homeowner’s association fees, and other fees have all been addressed before the seller transfers the property to the escrow agent, which is then transfered to the seller.

• Finally, passing along the keys and title of the property to the buyer, the title lien to the bank financing the deal, and the payments for the property to the buyer.

When all the above happens, a home purchase is closed and the home officially belongs to the buyer. The seller also gets paid and can deposit his income accordingly. The escrow agent files all the paperwork with the bank, the county recorder’s office, and copies are sent to the buyer and the seller for their own records.

Contact your trusted real estate professional if you have any additional questions about the closing process as well as other aspects of acquiring your new home. 

Buying a new home is exciting. Buying a brand new home can be even more so with the realization of being the first owner and possibly being able to choose your own layout and finishes. The prospect of owning new construction is definitely exciting, but it doesn’t come without its own set of questions.

If you’re in the market for a new home, and considering new construction, make note of the questions below when you begin your property search.

What Are The Long Term Plans For The Community?

Unless you’re looking at custom homes on acreage, it’s likely new construction in your area will be located in a new development or in a master planned community. With this in mind, feel free to ask about the plans for the community.

If it’s a large area, find out if any subdivisions are planned. If there are only a few houses built so far, it’s likely to mean lots of construction in the months to come – which means a lot of noise and construction traffic.

Also ask about the builder – if they’re well known and respected, it’s unlikely they’ll lose funding and the community will likely continue on as planned.

What Are The Homeowners Association’s Rules And Regulations?

Many new developments and master planned communities come with a set of rules and regulations set by a homeowners association. If you’ve never lived in a community with an HOA, it’s important to find out the rules before investing in it.

The bylaws and the CC&Rs will let you know what is and isn’t allowed in the community (especially when it comes to the exterior of your home). You’ll also want to find out when the HOA fee begins – in some communities, it can start before the home is even finished.

Are There Any Buyer Or Financial Incentives?

If the community or development is still in the early stages, there might be incentives (like a buyer discount, builder upgrades or other financial incentives or freebies) for buyers.

Sometimes these offers come with a catch – where something is expected from the buyer in return for the incentive – but it’s important to ask about any offers that may be available, especially if the community is still up and coming.

Are Warranties Provided?

New homes often come with different warranties. Ask if a workmanship and structural warranty come with the home.

A workmanship warranty (or builder’s warranty) is a warranty for newly constructed homes that offer limited coverage on workmanship and components of the home like windows, siding, roofs, doors, plumbing, electrical and HVAC. Traditionally, a workmanship warranty will cover a one or two year period; another likely warranty is a structural warranty, which covers the structure of a home.

If a warranty is provided, make sure you know exactly what is and isn’t covered and how much you’re responsible for in case of any issues.

Can you connect me with some current homeowners?

Just as you would check reviews before buying an item online or booking a service, the same can be said for a home builder. Just because the product is a shiny new home doesn’t mean you shouldn’t do your due diligence and check references before making a large investment.

While it’s likely that the builder will provide glowing reviews, checking reference and review websites and even knocking on the doors of current homeowners will provide additional information and give you a wider understanding of the builder and its practices. Talking to current homeowners will provide information about the actual community.

New construction is exciting, but you want to make sure you have all pertinent information before you go through with a home purchase. Your real estate agent will be able to help navigate the waters of new construction. Reach out to your agent with any questions you may have about buying new construction in your area.

For many Americans, retirement age is fast approaching or already here: Baby Boomers account for nearly 75 million individuals in the United States.

Retirement can present a lot of opportunities, especially when it comes to relaxation, activities, and the enjoyment of life with those of a similar age. More and more Americans are looking to 55+ communities to fulfill those wants and needs.

Active Adult Communities

55+ communities, also known as an active adult or age-restricted communities, are becoming increasingly popular throughout the U.S. because of what they offer and can provide. Traditionally thought to be only in warmer climates, active adult communities can be found in almost every state, and with more people retiring, new communities are being added every year.

Just like buying in a regular neighborhood or a master-planned community, there are a number of things to know or understand when it comes to investing in an active adult community and lifestyle. If you’re considering selling your current home and relocating to a 55+ community, here are some important things to consider before the big move.

Location

Location is an important consideration. Active adult communities can be found all throughout the U.S. While Florida and Arizona are known for their 55+ communities, it’s very likely there’s a community close to where you currently live.

Location is more than just where the community is located – location includes the proximity to towns or cities. Some may want a community that is cut off from large cities; others may want to be close to large metropolitan areas for what they can offer.

Location also includes things like local taxes – some states are much friendlier to retirees than others when it comes to taxes.

It’s also important to note the community’s location relative to an international airport if you plan on traveling a lot, medical centers, and other amenities that may be frequented daily or weekly.

Size

The size of the community is an important part of the community experience for residents. Communities will range in size, from just a couple hundred residents to thousands. The larger the community, the more residents.

Larger communities may offer more activities and amenities while smaller ones may be able to offer more comfort and relaxation with the reduced number of residents. If you’re interested in maintaining an active lifestyle and making friends, a larger community may be a better choice than a smaller one.

It’s also important to note that a larger community may offer more deals or incentives to those looking to buy within the community.

Amenities

Amenities are incredibly important when considering buying a home in an active adult community. A larger community will likely have a number of amenities and events while a smaller community may be limited in terms of what it can provide to homeowners. 

When looking at communities, ask about the amenities provided within the community: is there a golf course, tennis courts, clubhouse, rec center, or arts and crafts studio?

Are there any clubs, group activities, or social events?

Does the community provide ample amenities to maintain an active lifestyle?

It is important to ask whether a membership is required to partake in any activities (especially with things like golf, tennis or the use of a clubhouse or rec center). If so, a membership structure within the community may add extra costs to the community.

HOA

Homeowners Associations have become increasingly popular within planned communities, and 55+ communities are no different. An HOA may have additional say on things within the community than in a regular neighborhood.

While maintaining the general areas, an HOA in an active adult community may also dictate whether a homeowner can grill outside, park a car on the street rather than in a garage, and some may go as far as to dictate the time of day a homeowner can have a conversation on a patio or deck.

While an HOA helps maintain the look and feel of a community as a whole, an overbearing HOA or homeowners board can possibly make living in a retirement community not very enjoyable for some individuals.

Living In Place

Another option to consider is whether the community offers a “living in place” option. This is still a relatively new concept but it is becoming more and more popular.

Living in place options offer homeowners the ability to buy a home in a community when they’re still active and able to live without accommodations. Then, should one’s health change or it becomes more difficult to live independently, the homeowners are able to move to a fully furnished apartment or condo within the community where cleaning, cooking and other services are provided.

These options allow homeowners to stay in one community through each phase of their retirement. More expensive than traditional active adult communities, they are a viable option for those planning for the long run.

Retirement is an exciting time. Finding a community that supports retirees and provides a place for relaxation is important for many people. If you’re looking at active adult communities, reach out to your trusted real estate agent to get more information about local communities in your area.

A 55+ community can be a great choice for those looking to enjoy retirement with other retirees. Happy hunting!

Reality TV shows have inspired people to flip houses for profit. They make it look fun, easy and the type of business anyone with some capital can get into.

Every once in a while, house-flipping episodes show an underperforming sale and a financial loss. That is why people in the flipping business need a cushion in case things don’t pan out.

This brings us to a slightly different approach. Some speculators start out flipping land. Yes, that’s right. Land.

Flipping Land Can Be Less Risky Than Homes

Rough land can be far less expensive to invest in than blighted homes. There are also fewer unknowns in terms of flipping. Investors won’t need to worry about replacing an electric box, mold behind walls or failing a building inspection. Land flippers can also start with a modest out-of-pocket investment and work their way up to short-term lending to finance endeavors.

The Basic Considerations

There are a few things to keep in mind when selecting a parcel. Property that abuts a street with sewer and water are preferable to scrub land in areas without services. It is not uncommon to run into difficulty drilling an artesian well or getting a permit for a septic system. Developers know this and will jump at street-ready parcels first.

Make certain the parcel qualifies as a buildable lot with the town or city. Then, hire an excavation team or clear the brush and trees yourself. The goal will be to create an open area where a home can be built while leaving suitable greenery.

The next step is to call a real estate agent and list the property. Quick land turnovers can earn several thousand dollars in profit with minimal effort. Remember to factor in hidden costs such as taxes, interest, and recording fees, among others.   

Upping The Ante To Spec Homes

After gaining experience in the land flipping business, take that knowledge and apply it to homes. Rather than scoop up a dilapidated structure, employ that land development acumen and take the next step.

Select a parcel that is in a prime residential location. What a surprise it would be to find a wooded lot at the end of a desirable neighborhood that can be developed.

Create A Budget and Obtain Financing

Work closely with a real estate agent to understand the types of homes that are trending and the average sale prices. With that information in hand, come to an agreement with a general contractor who can oversee the spec house project.

Decide on a design and calculate the total costs. Don’t forget to add 15 percent for overruns. Take that number to the bank for a building loan and put the team to work.

Get The Listing On The Market

Spec home projects can be listed with real estate agents even before the first nail is driven into a 2X4. A savvy real estate agent can get a property up online with design information, an artful rendition of the finished home and key selling points. In a perfect world, a new home buyer may be found before construction begins.

It’s important to realize that it doesn’t require significant wealth to get into the home buying and selling industry. By starting with modest, low-risk land deals and working up to spec homes, a solid living can be earned in the real estate industry. If this idea intrigues you, contact your trusted real estate agent to help you find just the right piece of land for inspiration.

Last week’s economic reports included readings from Case-Shiller Home Price Indices, new and existing home sales and weekly readings on mortgage rates and first-time jobless claims.

Case-Shiller: Home Prices Rise to Near Four-Year High

February home prices rose 6.30 percent year-over-year and 0.50 percent month-to-month. Home prices rose just shy of a record set in 2014. The 20-City Home Price Index reported home prices were 6.80 percent higher year-over-year and rose 0.80 percent month-to-month in February. The year-over-year reading surpassed the peak reading in 2006. Home prices accelerated in contrast to analyst expectations that they nay slow as buyers deal with a short supply of homes for sale.

Cities with the three highest readings in year-over-year home price growth were Seattle, Washington with 12.70 percent growth, Las Vegas, Nevada home prices rose 11.60 percent, and San Francisco, California home prices rose by 10.10 percent according to Case-Shiller’s 20-City Home Price Index for February.

Severe shortages of homes and high demand in the west and in areas impacted by the housing bubble burst are driving the rapid rise of home prices; while it appears that homebuyers may be sidelined by high home prices, increasing home sales suggest that buyers may be buying before higher prices cut them out of the market.

Sales of New and Existing Homes Surpass Expectations in March

Sales of pre-owned homes rose to 5.60 million sales on a seasonally-adjusted year-over-year basis. Analysts expected a reading of 5.52 million sales based on February’s reading of5.54 million pre-owned homes sold. Sales of new homes also exceeded expectations with a sales rate 0f 694,000 sales on a seasonally-adjusted annual basis. Analysts expected a reading of 634,000 new hone sales. February’s reading was 667,000 new home sales. As with the boost in sales of pre-owned homes, analysts said that buyers are anxious to buy before they’re priced out of the market or cannot qualify for mortgage loans.

Mortgage Rates Rise, New Jobless Claims Fall

Freddie Mac reported higher average mortgage rates for the third consecutive week. Rates for a 30-year fixed rate mortgage averaged 4.58 percent and were 11 basis points higher. The average rate for a 15-year fixed rate mortgage was 8 basis points higher at 4.02 percent; The average rate for a 5/1 adjustable rate mortgage was seven basis points higher at 3.74 percent. Rising Treasury yields were driven by higher commodity prices drove mortgage rates higher.

Economic indicators have steadily strengthened, which traditionally boosts home prices. While analysts have shown concerns over rapidly rising home prices and mortgage rates, the Mortgage Bankers Association reported mortgage applications were 11 percent higher year-over-year.

New jobless claims fell to 209,000 first-time claims filed as compared to expectations of 230,000 new claims, and the prior week’s reading of 233,000 new claims filed. Lower jobless claims indicate fewer layoffs and strengthening labor markets.

What’s Ahead

This week’s economic releases include readings on inflation, job growth, and national unemployment. Weekly readings on mortgage rates and new jobless claims will also be released.

Choosing the perfect home to settle in can be a tough decision. You have to weigh in on many factors including price, size, features and amenities, number of bedrooms and baths, design, and so on. However, all these factors are not enough to give you a great home ownership experience if you fall into the wrong neighborhood.

Picking the right neighborhood not only guarantees you happiness and comfort, but also helps with home appreciation for the sake of future re-sale value. In most cases, though, it can be tougher to find the perfect neighborhood than it is to find the right house.

Here are some factors that can help you find the right neighborhood:

Schools

If you have kids and the quality of their education is a priority, consider a neighborhood with a reputable school district. Even if you don’t have kids, such a neighborhood will most likely boost your home’s appreciation. You may also find it easier to find a buyer if you decide to move away from the neighborhood.

Crime Rate

No one wants to live in a neighborhood with high crime rates. This is one of the basic factors that you must consider when searching for a new neighborhood. Check the area’s crime statistics from the local authorities, search online, or ask your potential neighbors.

Transport

This is also a key factor to consider. How far do you have to drive to work from the new neighborhood? How much traffic will you encounter in the area?

If you don’t drive, are there adequate public transportation networks in place? How will your kids travel to school? Make sure that the new neighborhood meets all your transportation needs.

Basic Amenities

Is the neighborhood close to basic amenities that you are used to or that you rely on? Such amenities may include a nearby hospital, pharmacy, grocery store, bank or ATM, and law enforcement center. 

Recreational Amenities and Activities

Does the neighborhood have a park where you can go for a picnic with your partner or where your kids can play and make friends? Are there cultural attractions such as concerts, art exhibits and film shows?

Are there bars, movie theatres and restaurants close by? Are there malls or stores where you can go shopping during the weekends? What about a library, gym or community swimming pool?

If you are fun-loving person, make sure your neighborhood can provide as much fun as possible. You don’t want to start having regrets about a boring neighborhood in less than a year after settling in.

Community Engagement

Are you looking for a neighborhood with a sense of anonymity or a sense of belonging? In some neighborhoods, neighbors hardly know each other while in others, block parties and community events are a common thing. Which one would you prefer?

It is not easy to find everything you want in one place, but you can definitely get most of it in a certain neighborhood if you search well enough. Create your wish list and contact your trusted real estate professional so that they can help you find your dream house in the best neighborhood for you. 

As a potential home buyer, you are probably familiar with what a typical sale looks like. You probably also have a basic understanding of what a foreclosure is and how it works. Another type of sale that may be less understood is called a short sale.

These sales are not as popular in the market, but you may come across a few. You may even fall in love with a home that is listed as a short sale. What does this mean for you as the buyer? These are the basic facts that you need to know about these homes and the process for purchase. 

What Is A Short Sale?

A short sale is negotiated when the lender for the current homeowner’s mortgage agrees to list the house for a smaller mortgage payoff amount. This means that they will be taking in less money than what is owed on the property in order for it to sell quickly on the market.

This usually happens when the current owner of the property, the seller, is in a distressed financial state. There are many reasons why a seller may have lost the ability to pay their mortgage, such as losing income or unexpected expenses. Maybe the owners are going through a complicated divorce and need to unload the property. Regardless of the reason, the lender has an incentive to remedy this situation.

How Does It Work For The Buyer?

When it comes to purchasing a short sale property, the process is not much different than purchasing any other home on the market. The lender will want to make sure that you will be able to complete the purchase, especially under these circumstances, so you will likely need to be preapproved or prequalified before your offer can be accepted. 

One major difference is that the process is typically more drawn out than if you were making a traditional home purchase. Even though it is called a short sale, it is not something that happens very quickly. In fact, it can take an average of 2 to 4 months for a short sale to be approved and for the actual closing to take place. 

Now that you understand the basics of a short sale and how it works, you can decide if it is something that may fit into your criteria and timeline. If so, and you do find a home you love, you should not let something like a short sale stop you from getting it. Your real estate agent can help navigate you through the process to make it as simple as possible. 

One of the challenges you will face when deciding how much money to put down on your new home is whether to put down a larger down payment or to take a bit of money from your down payment and use it to buy “discount points” to lower your interest rate.

There are pros and cons to doing both and each borrowers situation will be different so it’s important to understand which option is best for your individual situation. Some factors you should consider include:

• Cost of borrowing – generally speaking, to lower your interest rate will mean you pay a premium. Most lenders will charge as much as one percent (one point) on the face amount of your loan to decrease your rate. Before you agree to pay points, you need to calculate the amount of money you are going to save monthly and then determine how many months it will take to recover your investment. Remember, closing points are tax deductible so it may be important to talk to your tax planner for guidance
• Larger down payment means more equity – keep in mind, the larger your down payment, the less money you have to borrow and the more equity you have in your new home. This is important for borrowers in a number of ways including lower monthly payments, better loan terms and potentially not having to purchase mortgage insurance depending on how much equity you will have at the time of closing
• Qualifying for a loan – borrowers who are facing challenges qualifying for a loan should weigh which option (points or larger down payment) is likely to help them qualify. In some instances, using a combination of down payment and lower rates will make the difference. Your mortgage professional can help you determine which is most beneficial to you

There is no answer that is right for every borrower. All of the factors that impact your mortgage loan and your overall financial situation must be considered when you are preparing for your mortgage loan.

Talking with your real estate professional and where appropriate your tax professional will help you make the decision that is right for your specific situation.

If your financial situation is limited, yet you’re handy with a hammer and nails, then purchasing a fixer-upper home can be an attractive option. Fixer-uppers typically require a bevy of updates and repairs to bring the home up to current market conditions. Because of this, the listing price is often considerably less than a move-in ready home.  Your trusted real estate professional can help you find the best projects to buy and sell.

Getting Started

Fixer-uppers aren’t for everyone, but there are plenty of resources available if you plan to do most of the repair and upgrades yourself. Let’s take a look at a few top resources to tap into if you’re in the market for a fixer-upper or if you’ve already purchased one and you are ready to get started.

• At Home: A Blog by Joanna Gaines: Chip and Joanna Gaines are well known HGTV personalities who’ve made it their mission to fix up homes. A visit to Joanna Gaines’ blog is a gateway to renovation and decorating tips, products and real-time photos of projects in action. It’s a great place to go for inspiration.

• Hands-On Workshops: If there’s a Home Depot near your home, chances are you frequent it for many of your hardware needs. There’s another reason you should stop in: Hands-On Workshops. If you want guidance on things like installing bath vanities, tile backsplashes, hanging ceiling fans, or measuring and installing flooring, there’s likely an upcoming workshop at the store that can give you the know-how and confidence necessary to do it yourself.

• Jeff Patterson’s Home Repair Tutor: This YouTube channel boasts almost 120,000 subscribers and its how-to videos have racked up more than 30.5 million views. Videos include everything from how to tile a shower floor to installing a motion sensor light switch. If you need detailed step-by-step instructions on how to perform a particular job, chances are good this channel has it.

• The Craftsman Blog: Written by DIY fixer-upper and author Scott Sidler, this blog is packed with how-to advice for home improvement and restoration projects as well as general tips and information about repairs like painting, plastering and restoring windows. This is a blog for a DIY fixer-upper written by a DIY fixer-upper. 

• Your local hardware store: The big box hardware stores are great for finding just about any sort of tool you’ll need and for hosting how-to workshops. Generally, however, it’s your local, smaller hardware store that can really give you some great one-on-one advice as it pertains to your projects. These stores are typically family owned, and part of the reason they’re able to stay in business is because of their high level of customer service. This often includes guiding you on certain projects.

A fixer-upper can seem like a daunting project when you are getting started. Knowing where to look for the right resources can make a big difference.  Your trusted real estate professional is available to assist you and offer additional advice on your new endeavor.