When the new federal budget was recently passed by Congress, there was a provision pertaining to VA loans that could eventually make it easier for veterans and active duty military personnel to compete in the tight housing market.
Under the provision, the Secretary of Veterans Affairs (VA) is required to come up with some solutions to address the challenges that veterans are having in purchasing homes , especially in a very competitive housing market. The VA must present their proposed policy changes within a 90-day period from the time the budget was passed.
What Problems Are Veterans Reporting?
Many veterans report that their offers are being turned down time and again by sellers because the real estate agents involved just don?t want to deal with the hassles associated with VA loans or because they view other types of loans as being less risky.
According to one mortgage specialist quoted in Tacoma, Washington?s The News Tribune, ?In multiple-offer situations in this housing market, listing agents prioritize most financing above VA loans.? She said that offers are preferred in this order: cash, conventional loans with large down payments, VA loans, and then last, federal loans.
The article said that selling agents, who may advise their sellers on which offers are strongest, may also mistakenly view buyers using VA loans as being less qualified because these loans require no down payments. The agents may also have had past issues with getting real estate appraisals for VA loans performed quickly which can cause closings to take longer.
What Do Appraisals Have to Do with It?
According to an article published in Realtor Magazine last year, there are not only appraiser shortages in general, but many appraisers are also reluctant to work with the VA because of the lower compensation and stricter guidelines. The VA sets limits on both how much an appraisal can cost as well as how long it can take to return the appraisal report.
The VA has since raised the limit on appraisal costs, which can vary by state. In Washington state, for example, the fee that can be charged for an appraisal for a VA loan has increased from $500 to $800. The VA also increased the amount of time for the appraisal to be delivered, from 10 days to 14 days.
But while these changes may make a small difference, the consensus in the nation?s capital seems to be that the VA can do more to change its policies to help veterans and military personnel better compete when they?re trying to buy homes, especially in this tight market.
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Home sellers still have the upper hand in the housing market and there are no signs that this is going to change any time soon.
Inventory is still way down and competition remains stiff for homes that are on the market. January was the 28^th consecutive month that the volume of homes for sale dropped in the U.S., with that number down by 14.4% from January 2017, according to a recent article by Redfin.
Many Home Sellers Getting More than Listing Price
This means home sellers are often getting multiple offers and getting good prices, sometimes more than their asking prices. In January close to 20% of homes sold for more than their what sellers original listed.
Home prices are also continuing to go up in general. They rose this January by 7.8% from the year before, the report said, with the national median sale price at $280,500.
Prices rose the highest in Memphis, Tennessee, increasing by 24.6% over January 2017. Memphis was followed by two California cities: San Francisco (23.8%) and San Jose (21.6%); Baton Rouge, Louisiana (17.8%) and Seattle, Washington (15.4%).
Prices did slightly drop in four metros in January. These included Milwaukee, Wisconsin; Camden, New Jersey; Birmingham, Alabama and Baltimore, Maryland.
Homes Selling Faster than Ever
The average home was only on the market 53 days before a buyer was found, compared to 59 days in January 2017. But homes sold much faster in some markets. In San Jose, deemed the fastest market in the country, about 50% of homes that sold in January were under contract in just 12 days.
Many buyers are reportedly anxious to purchase before interest rates get any higher; however, one Redfin agent from Washington D.C. was quoted in the article as saying that inventory is even a greater driver than rates right now.
Because of the shortage of homes on the market, sales volume was still down for January in most areas of the country. However, 11 metros did see sales growth compared to a year ago. The top three were Salt Lake City, up 11.9%; Greenville, South Carolina, up 11.8%, and Kansas City, Missouri, up 7.5%. The three metros with the biggest declines in sales volume were all in Michigan in Detroit, Grand Rapids and Warren.
Acuity Real Estate Solutions
Acuity National Real Estate Solutions is a national title agency offering cutting-edge tools to help lenders reduce costs, streamline closings and increase compliance. If you?re a lender who would like more information, please contact us today!