Here’s how to choose between a house, condo or townhouse

Here’s how to choose between a house, condo or townhouse

Buying a home is a big decision. And choosing the right type of property? That’s critical to success.

The property type you opt for will ultimately impact your cash flow, how much work and maintenance the home requires, and the wealth you’re able to build over time.

Want to make sure you’re buying the right property for your budget and goals? Here’s what you need to know:

Condos

One of the biggest benefits of buying a condo is that they’re less costly — both upfront and over the long haul. Prices are lower on condos than on single-family properties, meaning you’ll need less saved up — not to mention less income — to make a purchase work. 

Additionally, they come with less upkeep. Since most condo exteriors are maintained by the property manager, this means a lot fewer maintenance and repair costs than you’d have on a traditional home. (It’s less hassle, too — especially if you’re not the handy type). 

On the downside, condos are less private, and you don’t own the land they sit on, either. This makes them less valuable in the long run. Most condos also have strict rules regarding decor and customization of the properties, and you’ll typically pay a COA fee to help keep up the community.

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Townhouses

Townhouses tend to be a bit larger than condos, and buyers actually own the land they rest on, too. They also typically offer more separation from neighbors, meaning more privacy and more peace and quiet. 

For the most part, townhouse communities are managed much like condos; exterior maintenance and repairs are handled by a property manager. This means less work and fewer upkeep costs in the long haul.

Another perk? That’d be the yard that many townhouses come with. Though they’re typically small yards, they may be the perfect choice if you’ve got pets or little ones in tow.

As with condos, these properties aren’t without fault. You’ll have a community association with restrictive rules and monthly or annual dues and, if your unit has a yard, you’ll probably be responsible for maintaining it, too.

House

When buying a home, most people think of the traditional, single-family house. With that option, you’re going to get the most space and privacy. You’ll also have a sizable yard, and you’ll enjoy more price appreciation than you would on a smaller property like a condo or townhouse.

Of course, with more space comes more cost. You’ll not only pay significantly more for a house initially, but you’ll also have more in long-term costs, too. There will be more maintenance and repairs to cover, higher insurance premiums to account for, and you’ll be responsible for things like property taxes and HOA dues, too. Budgeting will be critical if you op for a single-family house.

The bottom line

Generally speaking, a townhouse or condo is going to be your best bet if you’re buying a home on a tight budget or want a low-maintenance property. If you’re looking for a spacious home and are hoping to put down roots, personalize your property, and build long-term wealth, a single-family house is probably a better fit.
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People movers: Better.com, Credit Plus, Foundation Title & Escrow

People movers: Better.com, Credit Plus, Foundation Title & Escrow
HousingWire’s People movers section covers the latest hiring updates in the mortgage and real estate industry. This week, Better.com, Credit Plus and Foundation Title & Escrow Series announced changes to their leadership team. 

Better.com appointed Diane Yu as its new chief technology officer where she will lead engineering and technical strategy. Yu most recently served as CTO at Comcast for its Advanced Advertising Group, and prior to that, she co-founded and served as CTO at FreeWheel. The hire comes as the digital lender, run by CEO Vishal Garg, continues to prepare for an initial public offering this year. 

Credit Plus named Greg Holmes as its new president and CEO, succeeding Steve Grant, who has moved to an advisory role. Originally joining Credit Plus 15 years ago, he has served in several roles at the company, most recently as managing partner. Before his time at Credit Plus, Holmes served as the vice president of direct sales in the Eastern U.S. for LandAmerica. 

Foundation Title & Escrow Series hired Shawna Hulse as Tennessee president of the real estate title and closing firm. Operating out of the Foundation Title & Escrow headquarters in Franklin, Tennessee, Hulse comes to the company with more than 35 years of experience in the title industry, including multi-state operations management and legal, claims and underwriting administration. Her addition to the company comes shortly after the company announced expansions in Florida and Alabama. 

Have a hiring announcement you want to share? To be featured in our people mover section, email HW+ Managing Editor Brena Nath at bnath@housingwire.com
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Senate Finance Committee unanimously approves Yellen

Senate Finance Committee unanimously approves Yellen
By a unanimous 26-0 vote, the Senate Finance Committee approved Janet Yellen’s nomination to become U.S. Treasury Secretary on Friday.

Senate Majority Leader Chuck Schumer said there would be no other votes in the Senate on Friday, meaning there will not be confirmation of Yellen as Treasury Secretary until this weekend or next week, if she is approved.

Yellen has been confirmed by the Senate on four occasions, most recently as chairwoman of the Federal Reserve from 2014 to 2018.

Her Treasury appointment comes at a pivotal time in the forthcoming presidential administration, as President Joe Biden unveiled his $1.9 trillion COVID-19 relief package last week. The plan has received both praise and scrutiny, as the national debt has already exceeded the annual output of the country’s economy – around $21.6 trillion.

But Yellen told lawmakers on Tuesday the best policy was to “act big” to support struggling Americans. Specifically, she pushed hard for a minimum wage jump to $15 an hour.

“Yellen is a solid pick who can help steer the economy forward, calm the market when necessary and is unlikely to introduce any controversial policy surprises,” said Lawrence Yun, National Association of Realtors chief economist.

“In regards to the real estate industry, she understands the important role our housing market plays in America’s economic growth and recognizes the societal benefits and wealth building opportunities that homeownership can bring, especially among minority households.”

Biden said in November he planned to choose a candidate that would appeal to all camps within the Democratic party.

As Federal Reserve Chair, Yellen worked to bring stability to the economic market in the wake of the housing crisis of 2008. Yellen oversaw a program to sell Treasury and mortgage bonds that the Fed had purchased to stimulate the economy.

Yun said he hopes Yellen will place an “equal emphasis” on policy affecting commercial real estate – bringing vibrancy to local communities and turning raw land into developable lots. 

“That is especially important in the current environment of acute housing shortage,” Yun said. 
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Biden issues 60-day regulation freeze

Biden issues 60-day regulation freeze
As one of his first directives upon taking office, President Joe Biden announced a 60-day freeze on regulations to give his administration the time necessary to review any new rules. It could affect two recent rules related to mortgages.

Biden ordered that no new rules can be issued until a member of his administration is appointed to the head of the agency issuing the regulation. He also specified that all rules not already sent to the Office of the Federal Register should be immediately withdrawn for review and approval by a member of the new administration. And for rules that have already been published, Biden asked that departments consider postponing the rules’ effective dates for 60 days from Jan. 20.

After the rules are postponed, Biden mandated that, where appropriate, departments should issue a 30-day comment period to allow stakeholders to weigh in on the regulation. After reviewing the comments, departments should consider further delaying the rule or allowing for longer comment periods beyond the 60-day period, if it is deemed necessary.

After the regulations are reviewed, Biden gives two options for courses of action that should be taken:

For those rules that raise no substantial questions of fact, law or policy, no further action needs to be takenFor those rules that raise substantial questions of fact, law or policy, agencies should notify the OMB director and take further appropriate action in consultation with the OMB director

However, Biden did lay out several exclusions to the regulatory freeze. Exceptions include rules related to emergency situations or other urgent circumstances relating to health, safety, environmental, financial or national security matters. If a department believes the rule falls under these categories they were instructed to notify the OMB director.

“The OMB director will review any such notifications and determine whether such exclusion is appropriate under the circumstances,” the president stated in his memorandum.

This memorandum comes after former President Donald Trump’s administration pushed through several new rules in the last days he was in office.

In one of the Trump administration’s last acts, the U.S. Department of Housing and Urban Development declared that the Federal Housing Administration will once again back mortgages for immigrants under the Deferred Action for Childhood Arrivals program.

The Consumer Financial Protection Bureau issued a final rule clarifying that supervisory guidance is not backed by the same force as law or regulation. It also announced that some insured depository institutions and insured credit unions will now be exempt from regulations to establish escrow accounts for some higher-priced mortgage loans.
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COVID couldn’t stop the U.S. housing market in 2020

COVID couldn’t stop the U.S. housing market in 2020
Today the National Association of Realtors reported existing home sales for the month of December were at 6,760,000, a beat of estimates. This also closed the books on 2020’s housing market as we finished out the year at 5,640,000 total existing-home sales — a 5.6% increase from the same month in 2019.

Instead of thinking of the end of 2020 and going into 2021 as a hot sales market, this increase over December 2019 sales may be more appropriately interpreted as an end-of-the-year bump due to “make-up sales” for sales missed during the COVID shutdown in the spring of  2020. 

The COVID crisis of 2020 was responsible for a lot of abnormal metrics in the housing market. Data lines that are typically very sticky, i.e. take months to move significantly in either direction,  took waterfall dives, and then made parabolic recoveries — the existing home sales numbers are an extreme case of this. 

When I think about the 2020 housing market, the big take-home is not the V-shape recovery in many of the housing metrics or even the hotter-than-expected price growth. The big take-home is that 2020, despite the COVID crisis, began a period in our country (the years 2020-2024) when we have both the best housing demographics ever combined with mortgage rates low enough to keep housing stable for years to come.

We saw hints of this prime housing market period as early as February of 2020. The existing home sales report at that point was trending at 300,000 above my highest sales range for the year. To a casual observer that might not seem like a big deal, but February was the biggest single month in housing this century in my view – and the start of things to come.

During the summer of 2020, I wrote that, based on the February existing-home sales data,  if we didn’t end the year with 5,710,000 – 5,840,000  in existing home sales then, it would be because the COVID crisis prevented some sales from happening. I believe we are still making up for lost demand and this is why the monthly sales data are still so high.  This means that we can expect existing-home sales data to moderate in the coming months, even getting back to 6,200,000 on these monthly prints, once this makes up demand is exhausted.

The key is not to overreact to this drop. If we don’t get to 6,200,000 or lower in the 2021 monthly sales print, then demand is better than I thought. 

Also covered in the NAR report was housing inventory. Inventory is at all-time lows of 1.9 months. For context, inventory does tend to fall toward the end of the year and stay low until spring. However, even accounting for that we are at all-time lows. Compared to the previous year, days on market fell dramatically from 41 days to 21 days. Cash buyers and sales to investors also fell compared to the same month of the previous year. Mortgage demand picked up in 2020.

The MBA’s purchase application data for the last three weeks have shown nothing but positive growth compared to the same period last year. This week’s report has shown growth of 15%, and the previous two 10%, and 3%. I am looking for trend growth to be between 1%-11% year over year so for now, everything looks about right. Anything above 11% trend growth I would considered housing is outperforming again in 2021.

Just remember that the year-over-year data is going to look abnormally strong after March 18 because that was the period last year when the market was essentially frozen due to COVID. So, adjust your take on housing to those nine weeks after March 18.  All in all, this report shows a good year in 2020, even with COVID-19, mother demographics and low mortgage rates prevailed. 
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2020 ends with 3.4 million loans in delinquency

2020 ends with 3.4 million loans in delinquency
The final delinquency tally for December is in, with data revealing that by year’s end, 1.54 million more delinquent and 1.7 million more seriously delinquent mortgages were reported than at the start of 2020, according to a report from Black Knight. With nearly 2 million extra overdue loans in the pipe, that’s approximately 3.4 million loans in total at December’s end.

Overall, the data analytics company estimates a more than 250% increase in 90-day default activity year-over-year.

Despite this massive jump from years prior, the national delinquency rate did manage to show modest improvement in December – dropping for the seventh consecutive month to 6.08%, and the lowest level since April.

Serious delinquencies also fell to 2.15 million from 2.19 million the month prior, but remained a looming reminder of the the challenges facing the market in 2021, Black Knight said.

In the meantime, federal policy on forbearances and foreclosure moratoria pushed foreclosure starts and sales to record lows. Year-over-year starts fell 67% in 2020, and with just 40,000 completions, the year also saw a 70% decline in foreclosure sales from 2019.

However, Andy Walden, director of market research at Black Knight, said there are still a lot of unknowns as far as the cascading policies homeowners are currently protecting themselves with.

In President Biden’s Jan. 14 American Rescue Plan, he proposed an extension of the federal eviction moratorium to Sept. 30. On his first day in office on Wednesday, Biden signed an executive order that would push the moratorium to at least March 30, and on Thursday, the Department of Housing and Urban Development confirmed the extension.

“It’s something that’s going to need to be dealt with at some time. The nice part about having foreclosure moratoriums extend beyond the forbearance protections is that there are 2.7 million homeowners in forbearance right now and there’s a huge unknown of the percentage of those homeowners that are able to go back to performing,” Walden said.

In having those foreclosure protections extend beyond forbearance, Walden noted it will be easier to track and understand the data coming out of those forbearance expirations — whether it be loans going through various waterfalls, how many are back on track, how many need to be modified and so forth.

“More data dovetails more policy decisions,” Walden said.

The end of forbearance isn’t in sight just yet. The FHFA has not currently set an end date for its temporary COVID-19 forbearance policy, and the FHA announced on Dec. 21 that it was extending it’s deadline for single-family borrowers to request initial forbearance through Feb. 28. 

Biden’s rescue plan features an extension of initial requests for forbearance to Sept. 30, but the proposed extension has yet to be passed.
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Purchasing a home virtually? Here are 5 tips!

Purchasing a home virtually? Here are 5 tips!

Purchasing a home virtually has skyrocketed in recent months. 

In fact, according to a new report from real estate brokerage Redfin, a whopping 63% of last year’s buyers made at least one offer sight-unseen, never setting a single foot inside the property before putting in a bid.

In total, sight-unseen offers are now up nearly two-fold since 2018, when just 32% of buyers bought homes from afar.

If you’re considering doing the same — purchasing a home virtually from across the state or country, you’re certainly not alone. Just follow these tips to be successful:

1. Know your must-haves and your nice-to-haves.

Sit down and create a checklist. How many bedrooms must the home have? What about closet space, layout, appliances, flooring or other features? Write down all the requirements a house must meet to be the “one,” and then jot down a second section for those nice-to-haves — things you’d like but are willing to forgo if necessary. This will help you weed out homes faster and streamline your search.

2. Choose your agent wisely.

Not every agent is going to work well virtually. Some may not be well-versed in the latest technology or know how to handle virtual tours and closings. Others may simply be too busy to give you the more detailed guidance you’ll need when buying from far away. 

For these reasons, you’ll want to be careful about which agent you choose. Interview at least a few, read up on reviews and talk to them candidly about your goals to purchase a home virtually. Make sure your communication styles and schedule are going to sync up before moving forward.

More for Real Estate Enthusiasts

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3. Make sure you have FaceTime, Skype or Zoom downloaded.

These tools are non-negotiable when buying a house virtually. If you’re not going to tour a home in person, you absolutely need to tour it via live video somehow. Though pre-recorded video tours can be nice, going live with your showing can allow you to get more interactive with it. You can take your time, ask questions and even request a little more attention to certain rooms or areas.

4. Ask the right questions.

There’s a lot you won’t be able to see when touring a house virtually, so ask all the questions you can. What condition is the paint in? Could a 6-foot by 3-foot couch fit along that far wall? How is the natural light in the dining room? Get detailed, and ask your agent about things that can only be seen, felt or heard by actually being on the property.

5. Do your research.

Reading a home’s listing is not enough. You should also look up a potential property’s flood, wildfire and earthquake risk, and use Google Street View to “walk” the neighborhood. You can also check the local county’s website for property records. These can give you a good idea of the property’s history and background.

One more step

If you’re hoping to complete your full home purchase virtually — meaning close on your loan from afar, too — then you’ll need to be choosy about your mortgage lender and title company. 

Though many companies offer e-closing and remote notary options, not all of them do. You’ll want to shop around and be extra sure you’re choosing a partner who can offer the seamless virtual experience you’re looking for.

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Fannie Mae names Ryan Zanin EVP, chief risk officer

Fannie Mae names Ryan Zanin EVP, chief risk officer
Fannie Mae announced Ryan Zanin will be joining the company as its executive vice president and chief risk officer, effective Feb. 1.

Zanin has served on Fannie Mae’s board of directors since 2016, but will step down from this position on Jan. 31.

“I am grateful for Ryan’s service on Fannie Mae’s Board of Directors since 2016, and I’m pleased the company will continue to benefit from his extensive risk management experience and expertise in his new role,” said Sheila Bair, Fannie Mae chairwoman of the board.

Zanin brings over 30 years of experience in financial services and more than 20 years specializing in risk management to his new role. Zanin served as the president and CEO of the restructuring, strategic ventures and insurance group at GE Capital before he retired in July 2018.

Before that, he worked as chief risk officer of GE Capital. Before joining GE Capital, Zanin worked as managing director and chief risk officer of international capital markets at Wells Fargo and as chief risk officer of corporate and investment bank at Wachovia Corporation.

Previously, he was a member of the board of directors of the holding company for GE Capital, General Electric Capital Corp., and spent 14 years in leadership roles across Deutsche Bank AG and Bankers Trust.

“Ryan’s appointment as chief risk officer comes at a critical time for Fannie Mae,” Fannie Mae CEO Hugh Frater said. “Risk management is a core function of managing our business. Filling this position with someone of Ryan’s caliber is key to meeting our mission to sustainably serve lenders, homebuyers and renters, and provide liquidity through all market cycles.”

There has been a higher level of turnover for the mortgage giant in recent weeks. Observers at the time told HousingWire that the departure of Andrew Bon Salle, Fannie Mae’s former head of single-family lending, to Home Point Capital was a blow to the company. A fair amount of top talent left Fannie Mae and Freddie Mac in the final days of the Trump administration, as it became increasingly clear that the companies won’t exit conservatorship and go public anytime soon.
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Hispanic households to grow the most over next 20 years

Hispanic households to grow the most over next 20 years
In a release on Thursday, the Urban Institute projected the future headship rate — the share of adults who are the heads of households — and the homeownership rate — the share of household heads who own their homes — through 2040.

Per Laurie Goodman, Urban Institute vice president of housing finance policy, policymakers and thought leaders need to understand the trajectory of the homeownership rate — where it has been, where it is going, who it has benefitted, and who it has left behind.

The analysis found that household growth will be weak over the next two decades. After a 7.3 million average growth from 2010 through 2020, UI projects 8.5 million in growth from 2020 through 2030 and 7.6 million in growth from 2030 to 2040.

“This decline is the result of slowing U.S population growth and lower headship rates for most age groups,” Goodman said.

They also project that all of household net growth will be from households of color, and a majority of that growth, in turn, will be from senior citizens.

Here’s how to find property owners ready to sell

In today’s low-inventory environment, complicated by external factors such as forbearance and foreclosure moratoriums, it’s crucial for real estate agents and brokers to be proactive in order to grow their business.

Presented by: PopStream

Between 2020 and 2040, Hispanic households will grow by 8.6 million, households of other races (mostly Asian households) will grow by 4.8 million, and Black households will grow by 3.4 million. White households will decline by 0.6 million. Of the projected 16.1 million net new households formed in those 20 years, 13.8 million will be headed by someone over 65.

However, the homeownership rate will also continue to fall for every age group.

“People who were 25 to 44 years old in 2010 are the most affected age group, as the Great Financial Crisis hindered their ability to become or remain owners,” Goodman said. “The aging of the U.S. population will cushion the drop in the overall homeownership rate because older households have higher homeownership rates.”

In all, Goodman projects the overall homeownership rate will fall from 65% in 2020 to 62% by 2040.

Specifically, the Urban Institute projects the decline in the homeownership rate will be particularly pronounced for Black households headed by 45-to 74-year-olds. 

“If current policies stay the same, the Black homeownership rate will fall well below the rate of previous generations at the same age and result in an unprecedented number of Black renters over 65,” Goodman said. “We project elderly Black renters will more than double from 1.3 million in 2020 to 2.6 million in 2040.”

Between 2020 and 2040, there will be 6.9 million net new homeowner households, a 9% increase, per UI. Hispanic homeowners will grow by 4.8 million, homeowners of other races (mostly Asian homeowners) will grow by 2.7 million, and Black homeowners will grow by 1.2 million. The total number of white homeowners will decline by 1.8 million.

Finally, renter growth will be more than twice the pace of homeowner growth from 2020 to 2040. In the 20 year span, there will be 9.3 million net new renter households, a 21% increase, per the report. Hispanic renters will grow by 3.8 million, Black renters by 2.2 million, renters of other unspecified races (including Asian renters) by 2.1 million, and white renters by 1.2 million. 

Goodman said UI is already focusing on policies directly impacting seniors citizens and the racial homeownership gap.

“To prepare for the surge in renters and coming demographic changes, we need to increase the supply of affordable homes and better tailor these homes to the needs of future owners and renters through more flexible zoning and land use regulations,” she said.

“To decrease the enormous racial homeownership gap, we need to take concerted action to improve and expand financial education and homeownership preparation, and increase the visibility, access, and types of down payment assistance programs.”

Goodman added that re-examining the qualifications for borrowers for mortgages and revamping the process to more precisely assess creditworthiness will also decrease the racial homeownership gap.

“We need to implement programs that sustain homeownership for borrowers with less wealth — especially people of color,” she said.
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Startup profile: Propy

Startup profile: Propy
Taken from the December/January issue of HousingWire Magazine, Propy is making its splash in the real estate transaction process.

Back in 2019, the National Association of Realtors announced it was backing HousingWire 2020 Tech100 Real Estate winner Propy, a Silicon Valley startup whose real estate software aims to automate real estate transactions and allows properties to be bought and sold in an automated digital process that includes the use of cryptocurrency.

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