According to the National Association of Home Builders (NAHB), the Remodeling Market Index (RMI) held steady at 57 in the fourth quarter of 2013. This is the same level as the third quarter of 2013 and the highest reading since the first quarter of 2004.

An RMI above 50 indicates that more remodelers report market activity is higher (compared to the prior quarter) than report it is lower. The overall RMI averages ratings of current remodeling activity with indicators of future remodeling activity.

“The remodeling industry ends 2013 on a high note as remodeler confidence holds steady at a historically high level,” says NAHB Remodelers Chairman Bill Shaw, GMR, GMB, CGP, a remodeler from Houston. “We expect to keep this positive momentum going in 2014 as more home owners will continue to take on remodels and repairs that had been postponed in the downturn.”

The RMI’s future market conditions index rose from 56 in the previous quarter to 58, the highest reading since the inception of the series in 2005. Three of the four major components of the RMI’s future market conditions index increased in the final quarter of 2013. Calls for bids increased from 56 to 59, the amount of work committed for the next three months from 52 to 54 and appointments for proposals from 55 to 59. The backlog of remodeling jobs fell one point to 59.

In happy housing news, mortgage applications increased 4.7 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending January 17, 2014.

The Market Composite Index, a measure of mortgage loan application volume, increased 4.7 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 7 percent compared with the previous week. The Refinance Index increased 10 percent from the previous week. The seasonally adjusted Purchase Index decreased 4 percent from one week earlier. The unadjusted Purchase Index increased 2 percent compared with the previous week and was 15 percent lower than the same week one year ago.

The refinance share of mortgage activity increased to 64 percent of total applications, the highest level in a month, from 62 percent the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 7 percent of total applications.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) decreased to 4.57 percent, the lowest level since November 2013, from 4.66 percent, with points increasing to 0.36 from 0.33 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The effective rate decreased from last week.

The American housing stock continues to age, a trend that represents an opportunity for remodelers and over the long term may signal a future increased demand for new home construction.

According to the latest data from the Department of Housing and Urban Development American Housing Survey (AHS), the median age of an owner-occupied home in the United States was 35 years old as of the 2011 survey. The median age reported in the 1985 AHS was only 23 years old.

The 2011 AHS also found that 41 percent of the owner-occupied housing stock in the U.S. was built prior to 1969. Homes built from 2000 to 2009 account for 15 percent of the owner-occupied housing stock.

The share of the housing stock at least 40 years old, 41 percent, represents a significant increase over prior years. The share in 2001 was 35 percent and only 27 percent in 1991. The share of the housing stock at least 20 years old also increased significantly over the time period.

This information is important for housing demand, as older homes are less energy-efficient than new construction and will require remodeling or replacement in the years ahead. The aging housing stock represents an opportunity for well positioned builders and developers in areas where the population is not in decline.

View this original article on the NAHB Eye on Housing blog.

Freddie Mac recently released the results of its Primary Mortgage Market Survey® (PMMS®), showing average fixed mortgage rates drifting slightly lower for the second consecutive week amid recent reports that inflation remains subdued.

"Mortgage rates were flat to down a little this week amid reports that inflation remains subdued,” says Frank Nothaft, vice president and chief economist, Freddie Mac. “The Consumer Price Index was up to 0.3 percent in December after being unchanged in November. For the year as a whole, consumer prices rose just 1.5 percent in 2013."

• The 30-year fixed-rate mortgage (FRM) averaged 4.39 percent with an average 0.7 point for the week ending January 23, 2014, down from last week when it averaged 4.41 percent. A year ago at this time, the 30-year FRM averaged 3.42 percent. 

• Additionally, results show that the 15-year FRM this week averaged 3.44 percent with an average 0.7 point, down from last week when it averaged 3.45 percent. A year ago at this time, the 15-year FRM averaged 2.71 percent. 


• The 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 3.15 percent this week with an average 0.5 point, up from last week when it averaged 3.10 percent. A year ago, the 5-year ARM averaged 2.67 percent. 


• The index shows that the 1-year Treasury-indexed ARM averaged 2.54 percent this week with an average 0.5 point, down from last week when it averaged 2.56 percent. At this time last year, the 1-year ARM averaged 2.57 percent.

For more information, visit www.FreddieMac.com.

In Q4 2013, Appreciation Slowed from Summer Peaks; Formerly Boiling Markets like Bay Area Reduced to a Simmer, According to Zillow Fourth Quarter Real Estate Market Reports

• U.S. home values ended 2013 up 6.4 percent year-over-year, to a Zillow Home Value Index of $169,100.
• National annual appreciation rate expected to slow to 4.8 percent by end of 2014.
• Home values in Denver and Pittsburgh metros ended 2013 above their pre-recession peaks.

National home values completed 2013 on a high note, ending the fourth quarter up 6.4 percent year-over-year, a robust bounce off the bottom that is beginning to tail off in most areas and could cause problems in a handful, according to the fourth quarter Zillow® Real Estate Market Reports. The U.S. Zillow Home Value Index stood at $169,100 as of the end of the fourth quarter, up 1.4 percent from the end of the third quarter, and 0.6 percent from November. After peaking at 7.1 percent in August, the pace of annual home value appreciation fell below 7 percent throughout the fourth quarter.

Metro markets that were earliest to begin their recoveries and that had been showing the most robust home value appreciation throughout much of the year, including Southern California and the Bay Area, largely cooled off in the fourth quarter. Annual appreciation rates in Los Angeles, San Diego, San Francisco and San Jose slowed or were flat in each month of the fourth quarter compared to the month prior, a welcome sign in markets that risk crossing over into bubble territory as rising mortgage interest rates create affordability issues for homebuyers.

Looking ahead:
As the market enters 2014, national appreciation rates are expected to slow considerably. Nationwide, home values are expected to rise another 4.8 percent through December 2014, according to the Zillow Home Value Forecast. But local market conditions will not necessarily follow national conditions, a trend that may cause confusion and uncertainty among homebuyers and sellers. Zillow expects all but one of the nation’s 35 largest metro areas (St. Louis, -3.1 percent) to show appreciation this year, but the expected annual appreciation rates vary from 16.1 percent in Riverside, Calif., to just 0.4 percent in Kansas City. None will approach the often breakneck pace set in 2013.

“The housing recovery is entering the middle innings after an incredible run in 2013. Below the surface of last year’s market, a number of unsettling trends started to emerge as a result of rapid and ultimately unsustainable appreciation, setting up a bit of a mixed bag for 2014,” said Zillow Chief Economist Dr. Stan Humphries. “Affordability issues will help put the brakes on many markets that saw huge appreciation rates, like California and the Southwest, creating volatility that could potentially cause whiplash for homebuyers and sellers. At the same time, we expect more homes to be available this year as more sellers enter the market and more homes get built, and a decline in investor competition should make for a more hospitable market for many buyers. While a truly ‘normal’ market remains a ways off, we expect to take more steps in that direction as appreciation moderates, negative equity recedes, federal stimulus is withdrawn and foreclosures wane.”

Among the largest 35 metro markets covered by Zillow, all but three (St. Louis, -3.8 percent; Indianapolis, -2.1 percent; and San Antonio, -0.8 percent) showed annual appreciation in 2013. Home values in two of the top 35 metros, Denver and Pittsburgh, ended 2013 above their pre-recession peaks.

National rents rose by 0.7 percent in the fourth quarter compared with the third quarter, to a Zillow Rent Index of $1,302. Year-over-year, rents nationwide rose 2.4 percent. A total of 4.84 out of every 10,000 homes nationwide were foreclosed upon as of the end of the fourth quarter, down 0.4 homes per 10,000 from the third quarter and down 1.2 homes per 10,000 year-over-year.

For more information visit Zillow.com.

Homeowners and renters looking to make extra money by renting out their homes to visitors in town to watch the Broncos play the Seahawks in Super Bowl XLVIII are urged to first contact their insurer, according to the Insurance Information Institute (I.I.I.).

"Before renting out all or part of your home, tell your insurer about your plans to make sure you're covered if your property is damaged or if someone is injured," said Jeanne M. Salvatore, senior vice president, chief communications officer and author of the I.I.I.'s Fine Print Blog.

This is the first time the Super Bowl is being held in the New York City metro area. As a result, the market for rental properties near the game's venue, Met Life Stadium in East Rutherford, New Jersey—just eight miles west of mid-town Manhattan—is red-hot. Peer-to-peer rental websites such as Airbnb are letting consumers tap into this demand, potentially earning a "postseason bonus" by making their homes available to the thousands of football fans and visiting Seattle and Denver faithful.

Some insurance companies may allow policyholders to use their property as a rental for a one-time, special occasion like the Super Bowl, as long as the insurer is informed about it ahead of time. Other insurers, while allowing this type of arrangement, may insist on other criteria being met, such as the homeowner acquiring additional insurance coverage.

Keep in mind that there are some insurers who will consider any rental of your home to be a business venture, requiring the purchase of a business policy—specifically either a hotel or a bed and breakfast policy—because a standard homeowners insurance policy excludes losses arising from the operation of a business.

"Technological advances have allowed for the growth of the sharing economy" said Salvatore. "But, if you participate, it is your responsibility to make sure you're adequately insured. And, if you are a renter also talk to your landlord or look at your lease to make sure you are allowed to rent out your home.

Source: Insurance Information Institute

Recently, Freddie Mac released its U.S. Economic and Housing Market Outlook for January showing that four of the key housing indicators are all moving in the right direction, which bodes well for an ongoing recovery.

"As we start 2014, the housing recovery continues its steady pace,” says Frank Nothaft, Freddie Mac vice president and chief economist. “House-price gains will likely moderate from last year's pace but rise about 5 percent in national indexes. Home sales, as well as other key indicators, continue to trend in the right direction, although in some markets we are seeing the sales recovery strengthen while many others remain weak."

Outlook Highlights and First Quarter Projections
• December's unemployment rate of 6.7 percent remains stubbornly high. It may take another two years until labor market gets back to full employment.
• Mortgage delinquency rates at 5.88 percent have been nearly cut in half from their peak, but they are still very high from their long term normal average of approximately 2 percent.
• From 1999-2006, mortgage payments on a hypothetical 30-year fixed-rate mortgage would have increased by 50 percent more than income growth. Currently, payment-to-income ratios are only 60 percent of the level we had in 1999 suggesting room for continued house price growth.
• When measured against the single-family housing stock, historically home sales have averaged about 6 percent of the stock at an annual rate. During the housing boom, home sales increased up to about 9 and then plummeted down to around 4 percent. With home sales at a 5.8 million pace in 2014 this rate should rise up to 5.7 percent for 2014.

For more information, visit www.FreddieMac.com.

“I’d wish I’d know that before I made a decision.” If you’ve ever regrettably said this to yourself, having a checklist might have prevented the issue in the first place. This list of questions can provide you with things to discuss when interviewing a moving company.

Fees

• What is the charge for packing?
• Does it include boxes? If not, what do they cost and will you deliver them?
• Is there an additional charge to deliver some items to a storage unit?

Insurance

• How is a damage claim handled?
• What insurance do you provide and is there a cost?
• Does the insurance cover items packed by the owner?
• Can additional insurance be purchased?
• If items are covered by my Homeowner’s insurance, whose insurance pays first?

Unusual Items

• Can you ship my car(s)? Will they be in the moving van or towed?
• What are the charges for shipping cars, lawn tractors, etc?
• What items cannot be shipped?
• If a shuttle truck is needed because of the location of my house or size of the drive way, is there an additional charge?
• If packing and loading are on different days, can you leave the beds and other basics out for us to use?

Dates

• What dates are available for our move?
• What date will you pack and how long will this take?
• What date will you load the van?
• What date will the van arrive at my new location?
• If my new home is not ready for delivery, how many days can it be delayed before there is a charge?
• What is the charge for additional days or weeks?

Terms

• Are there any additional fees that I’m responsible for that have not been discussed?
• What are the terms of payment?
• Is a down payment required?
• When will the balance be due and who is authorized to accept it?

A: To save both time and money, some people avoid getting building permits. But most cities require them. Besides ensuring safety during construction – housing inspectors sometimes stop by to check on the progress of projects at key points – they are also a source of revenue.

Cities charge a fee when a building permit is issued. Also, work done with a building permit can result in an increase in the homeowners’ property taxes because, in general, a home improvement increases the assessed value of the property.

Permits are usually required when any structural work is planned or the basic living space of a home is altered. They generally cover new construction, repairs, alterations, demolition, and additions to a structure. Some jurisdictions require the permit to be posted in a visible spot on the premises while the work is being done.

Besides structural changes, permits also may be needed to cover the installation of foundations for tanks and equipment, as well as the construction or demolition of ducts, sprinkler systems, or standpipe systems.

By law, all buildings must have a building permit and a certificate of occupancy before they can be used.

Following an unusual surge in housing starts in November, nationwide housing production fell 9.8 percent to a seasonally adjusted annual rate of 999,000 units in December, according to newly released figures from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau.

“Total housing starts of just under 1 million units in December was the third-highest monthly level of production in 2013,” says Rick Judson, chairman of the National Association of Home Builders (NAHB) and a home builder from Charlotte, N.C. “This rate is in line with our builder surveys, and tells us we are seeing a return to trend after a strong November.”

“Last year was a good year for home building, with overall production up 18 percent from 2012,” says NAHB Chief Economist David Crowe. “As pent-up demand is unlocked and the labor market improves, we anticipate that 2014 should be an even better year for home construction. That’s good news for economic growth, as each new home that is built creates three full-time jobs and contributes to the tax base of local communities.”

Single-family housing starts fell 7 percent to a seasonally adjusted annual rate of 667,000 units in December. Except for November, this was the highest monthly total for single-family starts in 2013. Meanwhile, multifamily starts fell 17.9 percent to 312,000 units in December.

Regionally in December, combined single- and multifamily housing production rose 15 percent in the West but fell 33.5 percent in the Midwest and 12.3 percent in the South. Production was unchanged in the Northeast.

Overall permit issuance fell 3 percent to 986,000 units in December. Single-family permits dipped 4.8 percent to 610,000 units from a strong pace the previous month, while multifamily permits were unchanged at 376,000 units.

The Northeast and West posted gains of 11.2 percent and 10.5 percent in permitting activity for December, while Midwest and South registered declines of 18.8 percent and 7.4 percent, respectively.

For more information, visit www.Nahb.org.