Rehab Loans Get Modernized
Massachusetts Housing Inventory Inches Up | Massachusetts Top State to Live In | News Nuggets
203(k) Loans Get More Streamlined
The U.S. Department of Housing and Urban Development, through its Federal Housing Administration (FHA), recently published updated policies for its 203K Rehabilitation Mortgage Insurance Program.
The changes aim to modernize the program and enhance its usefulness for home buyers seeking financing to purchase and rehabilitate a single-family home. The FHA expects the program "enhancements" to increase program usage.
The 203(k) program allows borrowers to use FHA-insured financing, including the cost of rehabbing, in a single mortgage used to purchase or refinance a home. The program covers structural repairs such as foundations and new roofs, modernization of kitchens and bathrooms, and projects to increase energy efficiency and climate resilience.
The changes to the program include the following.
Increasing the allowable total rehabilitation costs a borrower can finance under the Limited 203(k) program from $35,000 to $75,000 and reviewing this limit annually to ensure it continues to keep pace with market conditions;
Providing more time for rehabilitation and repair work completion by extending the rehabilitation period to 12 months for the Standard 203(k) and nine months for the Limited 203(k);
Expanding the fees 203(k) consultants can charge for various activities. The FHA has not updated the fee schedule since 1995. The FHA designed the new fee structure to appropriately compensate consultants for their role and encourage more consultants to participate in the program; and
Allowing the financing of the 203(k) consultant fee in the total mortgage amount for the Limited 203(k) if a borrower chooses to use a 203(k) consultant. A 203(k) consultant helps prospective home buyers with reports and accurate and detailed repair estimates.
Greater Boston home buyers, facing limited homes for sale and older housing stock, often lack the cash to make a down payment, pay for closing costs, and fund immediate, necessary repairs. A rehabilitation loan is an excellent solution for critical upgrades, e.g., roof, heating system, windows, and cosmetic updates, such as remodeling a kitchen or bathroom.
Massachusetts Home Prices Up Despite Slight Increase in Inventory
The Massachusetts Association of Realtors released its July real estate report today, indicating single-family and condominium inventory rose slightly in July on a year-over-year basis.
Despite the rise in house inventory by about 2 percent and condo supply by nearly 1 percent, home prices rose. The median price of a single-family home rose 6 percent to $678,500 in July compared to July 2023. The median condo price rose 1 percent to $575,000.
Single-family sales increased 10 percent statewide in July, and condominium units sold rose just over 1 percent.
The slight increase in inventory notwithstanding, housing supply remains tight. There were about two months of supply for single-family houses and condos in July. About five or six months is considered a balanced real estate market between home buyers and sellers.
Top States to Live In: MA 1st, NH 5th, and RI 28th
A recent study ranked Massachusetts as the best state to live in, primarily due to its robust healthcare system and high-quality education.
WalletHub, a personal finance company, compared the 50 states based on 51 key indicators of livability, ranging from housing costs and income growth to the education rate and quality of hospitals.
WalletHub pointed out Massachusetts has the lowest premature death rate in the country and the lowest share of adults in fair or poor health. It also has the highest percentage of residents with health insurance coverage, at more than 97 percent.
The Bay State also ranks first for the quality of its school systems. It has the country's fourth-best high school graduation rate, better than 90 percent. Good-quality education has helped the state's residents succeed financially, with the third-highest median household income exceeding $94,000.
Massachusetts has the third-lowest property crime rate in the U.S. and has the third-best access to public transportation. Of course, access to public transit doesn't necessarily mean residents want to use it (when it's running).
Education, healthcare, and public transportation come at a cost. Massachusetts ranked 44th for affordability.
"When deciding on a place to move, you should first consider financial factors like the cost of living, housing prices, and job availability," said Cassandra Happe, a WalletHub Analyst. "Many states have strong economies, though, so you should also consider a wide variety of other factors, such as how where you live will impact your health and safety and whether you will have adequate access to activities that you enjoy." Happe added, "If you have children, a robust education system is also key."
New Hampshire ranked fifth overall, and Rhode Island ranked 28th.
New Hampshire had the lowest percentage of its population living in poverty. It ranked second for its economy and second in education and health. The Granite State placed third for safety. While Massachusetts ranked sixth for "quality of life," New Hampshire finished 38th.
Rhode Island ranked 45th for affordability and 44th in quality of life.
Florida and New Jersey ranked second and third, respectively. Utah placed fourth.
News Nuggets
Can a Rhode Island Homeowner or Renter Have Access to a Private Beach?: Rhode Island's private homeowners and the public have squared off in court about who can access beaches and how for many years. Boston.com writes on August 14, 2024, "The state's constitution protects shoreline access, and so does a 2023 law that guarantees public access to 10 feet above the high tide line, known as the 'wrack line' — 'recognizable by a line of seaweed, scum, and other deposits left where the tide reached its highest point.' But where that line falls in a changing coastline can be tough to pinpoint, and tensions persist between property owners and those who seek the shore." A judge's recent preliminary ruling believes the 2023 law constitutes a taking of private property. Others argue anyone should be able to take a long walk along the beach. Read the entire article.
Boston Ranks 19th in New Apartments in 2024: A new study from RentCafe expects U.S. apartment construction to reach a historic high of more than 500,000 new units in 2024. The jump in construction represents a 9 percent increase compared to last year and a 30 percent jump from 2022, Boston Agent magazine reported. Boston ranked 19th among major metro areas, with more than 8,000 apartments expected in 2024. The study projected that more than two million new apartments nationwide will hit the market by 2028. The study predicts the rate of apartment building to dip from 2025 through 2027.
Massachusetts Construction Costs Third Priciest in Nation: According to a recent report, the average construction cost per new housing unit ($334,280) in Massachusetts is the third highest in the United States. Boston.com reported on August 13, 2024, that Construction Coverage's report named Massachusetts a "bottom state" for investment in affordable housing, behind only Hawaii and Wyoming. High construction costs lead to higher housing costs, making it harder for housing consumers to find affordable housing and aggravating housing shortages, particularly for lower-income residents. Michael Stromberg, lead data analyst at Construction Coverage, told Boston.com that the high cost of new housing in the Boston metro area and statewide indicates economic prosperity and highlights the challenges of increasing affordable housing. Stromberg said that complicated permitting processes, strict building codes, and restrictive zoning laws often increase construction time and costs.