Real estate indicators are starting to shift in favor of home buyers as the housing market sets its sights on spring. Mortgages are getting cheaper, housing inventories are growing, and home prices are rising at a slower pace.

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Mortgage rates have been holding steady for the last few weeks. The 30-year fixed-rate mortgage averaged 4.45 percent last week, according to Freddie Mac. Late last year, mortgage rates were nearing the 5 percent threshold, but several weeks of decreases have offered some relief to home shoppers. The five-year adjustable-rate mortgage has been averaging under 4 percent, landing at 3.90 percent last week, Freddie Mac reports.

Home buyers are responding to the lower rates. New mortgage applications of home buyers across the country surged to the highest level since 2010 during the week ending Jan. 11, according to the Mortgage Bankers Association. Applications were 9 percent higher than they were the week before.

Housing inventories have grown significantly in many markets too, offering buyers a lot more choices. That is helping to put a tighter lid on home price growth as sellers face greater competition. Homebuilders are reportedly lowering their prices in many areas too. A quarter of newly built homes saw a price cut during the last quarter of last year.

The decrease in mortgage rates is likely to boost home sales this year, compensating for the decline in sales recorded last year while pushing prices up modestly, says NAR Chief Economist Lawrence Yun. “With the return of homebuyers, home prices look to rise again in 2019, but with one big difference. For the first time in years, income gains of a projected 3.5 percent will outpace home price growth of around 2 percent. That is healthy and a turn toward better housing affordability,” Yun writes in a Jan. 24 opinion piece in the newspaper The Hill.

Certainly, for home sellers, lower prices may not sound ideal. But housing analysts say sellers need to set a realistic price up front to find a buyer as the market shifts.

“The good news here for sellers is that—with interest rates down and slowing prices—more prospective buyers should be encouraged to get off the sidelines, shop around, and consider making offers,” writes Kenneth Harney, a syndicated real estate columnist for The Washington Post.

 

Mortgage rates have mostly stabilized this month and are now essentially at the same point they were last spring, but that hasn't yet given a boost to home sales, which declined over the same period.

“Given that the economy remains on solid footing and weekly mortgage purchase application activity has been strong so far in 2019, we expect the decline in home sales to moderate or even reverse over the next couple of months,” says Sam Khater, Freddie Mac’s chief economist.

Freddie Mac reports the following national averages for mortgage rates in the week ending Jan. 24:

• 30-year fixed-rate mortgages: averaged 4.45 percent, with an average 0.4 point, unchanged from last week. Last year at this time, 30-year rates averaged 4.15 percent.
• 15-year fixed-rate mortgages: averaged 3.88 percent, with an average 0.4 point, holding the same as last week. A year ago, 15-year rates averaged 3.62 percent.
• 5-year hybrid adjustable-rate mortgages (ARMs): averaged 3.90 percent, with an average 0.3 point, rising from last week’s 3.87 percent average. A year ago, 5-year ARMs averaged 3.52 percent.

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Farmhouse design continues to gain popularity in kitchen remodels, according to the 2019 Houzz Kitchen Trends Study, a survey of more than 1,300 homeowners who are planning or in the midst of a kitchen project.

Eighty-two percent of renovating homeowners this year who are changing the style of their kitchen says they’re making it farmhouse. Farmhouse now nearly ties contemporary in popularity (14 percent versus 15 percent, respectively). Transition—a mix of tradition and modern—still remains the most popular in kitchen design at 21 percent.

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“This year's study illuminates a number of prominent trends in today's kitchen,” says Nino Sitchinava, Houzz principal economist. “Engineered materials are clearly taking over natural stone in countertops and flooring. Thanks in part to the versatility of these materials, white continues to dominate the kitchen, from cabinets to countertops and walls. Finally, rapid advances in wireless and voice technology are transforming some kitchens into ‘air traffic control’ centers of the home.”

Kitchens aren’t cheap to redo and are about 10 percent more expensive this year, according to the study. The median kitchen renovation cost $11,000, while a major renovation to a large kitchen (more than 200 feet) cost $33,000.

Here are some more kitchen trends that emerged from the Houzz report:

Gray cabinets: White cabinets remain the most common (43 percent), but gray cabinets are winning over more fans. About one in ten homeowners—or 11 percent—chose gray cabinets for their kitchen. Gray cabinets are then often paired with brushed or satin nickel door hardware.

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White and quartz countertops: Granite continues to decline in popularity, while engineered quartz is surpassing all of the natural stone materials combined among kitchen remodelers who updated their countertops. White counters are gaining steam, making up nearly one in every three upgraded countertops.

Mixed finishes: More than half of homeowners—54 percent—say they’ve mixed metal finishes across their fixtures and hardware. For those who mix and match, nickel is popular, but many then opt for oil-rubbed bronze or brushed or satin black finish for door hardware and lighting fixtures.

Engineered flooring: Only a quarter of remodelers who updated their flooring chose natural hardwood, marking a significant decline from recent years. Engineered flooring—such as engineered wood, vinyl, and laminate—have become nearly twice as popular in the meantime.

Appliance finish: Stainless steel may still rule, but black stainless is growing more popular as an appliance finish. It is now in one of every 10 upgraded kitchens. Read The New Kitchen Finish: Black Stainless

High-tech add-ons: More than half of upgraded faucets are high-tech, including water efficiency, no-fingerprint coating, and touch-free activation. Other high-tech features in the kitchen include wireless controls in upgraded appliances and home assistants.

Pergolas, metals, and pinks will be the leading landscape cravings of 2019, according to the National Association of Landscape Professionals. The NALP surveyed 1 million of its landscaping professionals to predict the hot trends that will influence the design and maintenance of backyards across the country.

“Homeowners yearn for beautiful outdoor spaces without the hassle of upkeep,” says Missy Henriksen, the NALP’s vice president of public affairs. “This year’s trends reflect current lifestyle preferences as well as innovations happening in the industry that are transforming landscapes across the country.”

NALP predicts the following trends will have the biggest influence on outdoor spaces in the new year:

1. Two-in-one landscape design. “Functional elements are no longer a perk, but rather a necessity in today’s landscapes, as consumers desire stunning outdoor features that have been cleverly designed to serve a dual tactical purpose,” according to the NALP. This might include an edible vertical garden on a trellis that also doubles as a privacy fence; a retaining wall that also includes built-in seating for entertaining, or a colorful garden bed that divides properties.

2. Automated lawn and landscape maintenance. “The latest technology and equipment allow tasks to be more streamlined and environmentally efficient than ever before,” the NALP says. For example, robotic lawn mowers are rising in popularity, and programmable irrigation systems and advanced electrical systems are proving to be extensions of smart homes.

3. Pergolas. Pergolas constructed of wood or composite material are getting major upgrades, such as roll-down windows, space heaters, lighting, and sound systems. “When paired with a luxury kitchen, seating area or fire feature, pergolas can become the iconic structure for outdoor sanctuaries,” according to the NALP.

4. Pink hues. Pops of coral and blush are predicted to be added to more landscapes this year. Pantone’s pick of Living Coral as its 2019 Color of the Year has more landscape professionals predicting the rich shade of pink will pop up outdoors, especially through fresh blooms of roses, petunias, zinnias, and hibiscus in flower beds. Lighter blush tones will also become “the new neutral” in landscaping, the NALP predicts.

5. Metals. “Whether homeowners want a bold statement or whimsical touch, incorporating metals can bring new dimensions to landscape design,” according to the NALP. Metals may be incorporated in decorative art and water features or through outdoor furniture and accessories.

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Sellers whose homes aren’t in tip-top shape may need to spend extra money or put in a little elbow grease to get their properties in market-ready condition. But what are the most important repair or maintenance tasks that support a higher asking price? “Smaller and less expensive updates in combination with good staging will have a great return,” Susanna Haynie, GRI, a sales associate with Colorado Real Estate Group in Colorado Springs, told HouseLogic. The National Association of REALTORS®’ consumer-facing news service highlighted some of the most important items to address before putting a home up for sale.

1. Fix flooring flaws. “Scratched-up wood flooring, ratty, outdated carpeting, and tired linoleum make your home feel sad,” the HouseLogic article notes. “Buyers might take one step inside and scratch the property from their list.” Most buyers don’t want the hassle of replacing carpet and may not accept a credit to cover the cost after the sale, Haynie says. When refinishing hardwood floors, for example, homeowners can expect to spend an average of $3,000 but recoup 100 percent of that cost at resale, according to NAR’s 2017 Remodeling Impact Report.

2. Repair water stains. The home’s plumbing issues may have long been resolved, but leftover water stains will mislead buyers into thinking the problems still exist. First, double-check that the problem truly is fixed, and then make any needed repairs to the walls or floors. Water-stained ceilings can cost about $670, on average, to fix. Drywall costs about $1.50 per square foot to repair.

3. Touch up the grout. Yellow or cracked grout can be a turnoff to buyers. New grout can make old floors look revived. “The best return-on-investment projects before selling a home involve making a home look like new,” Shelton Wilder, a sales associate at Berkshire Hathaway HomeServices in Los Angeles, told HouseLogic. Bathroom re-grouting costs an average of $1 to $2 per square foot, increasing to $10 for more complex jobs.