No end of year slow down in 2017 for newly constructed homes, according to the Mortgage Bankers Association’s¬†Builder Applications Survey results, that were¬†released¬†This Week in Real Estate.¬†Below are a few¬†highlights from the second¬†week of January that influence our business:
*¬†New Home Sales Defy Holiday Lull, Rising in December.¬†Despite the usual holiday lull in overall mortgage applications, the demand for newly constructed homes increased in December. The Mortgage Bankers Association (MBA) said its Builder Applications Survey (BAS) found those applications were up 18 percent from November.¬†The¬†applications were 7.8 percent higher¬†than in December 2016.¬†“Looking at all of 2017, applications increased by 7.1 percent compared to 2016. Based on December applications, we forecast that new home sales fell in December but remained nearly 16 percent higher than a year ago, and we are anticipating only modest year over year growth for new home sales in 2018. Despite robust demand, a lack of labor and land will continue to constrain homebuilders,”¬†said Lynn Fisher, MBA Vice President of Research and Economics.
*¬†Home Equity Hits Record High, and Here’s How Homeowners are Spending It.¬†Homeowners are racking up record amounts of home equity,¬†thanks to fast-rising values in today’s competitive housing market. No surprise, more people are now starting to tap that cash. What are they spending it on? Mostly making their homes even more valuable.¬†Renovation spending is soaring, and 80 percent of borrowers taking out home equity lines of credit say they would consider using that money to renovate, according to a survey released in December by TD Bank.¬†“We’re not only seeing more requests for proposals, but more committed projects from home owners,” said Steve Cunningham, a remodeler from Williamsburg, Virginia, in a report from the¬†National Association of Home Builders. “In addition to regular updates and repairs, there’s been an uptick in more ambitious large remodel requests.”¬†Remodeling spending topped $152 billion in 2017, and renovations for owner-occupied single-family homes will increase 4.9 percent in 2018 over 2017, according to the NAHB. That does not include remodeling done by investors looking to flip or rent properties, both of which are increasing as well.
*¬†Property Tax Revenue Increases for 22nd Consecutive Quarter.¬†NAHB analysis of the Census Bureau‚Äôs quarterly tax data¬†shows that $556 billion in taxes were paid by property owners over the four quarters ending in Q3 2017.¬†It has now been five and a half years since four-quarter property tax revenues last declined.¬†Property taxes accounted for 40.1% of state and local tax receipts and the share has remained above 40.0% for the consecutive quarters for the first time since 2012-2013. ¬†In terms of the share of total receipts, property taxes are followed by individual income taxes (28.3%), sales taxes (27.7%), and corporate taxes (3.8%).¬†After increasing as a share of state and local tax receipts for six consecutive quarters, property taxes have since held steady at 40.1%.