Tag Archives: market

Housing Industry Riding Coat Tails of Surging Job Market

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Where the job market goes, the housing industry follows. And with the economy continuing to hum, both sectors are surging further upward in the new year, according to economists from two companies who would know: realtor.com® and job search site indeed.com.

“The news is good. Employers are looking at 2016 as being quite strong,” said Tara Sinclair, the chief economist for indeed.com, during a joint press briefing in Washington, DC, with realtor.com® chief economist Jonathan Smoke.

Both laid out predictions for another year of steady home sales and job growth, particularly in the country’s largest urban centers. New York City, Atlanta, Chicago, and Los Angeles, as well as the high-tech hubs of the San Francisco Bay Area, Denver, Seattle, and Austin, all had strong employment gains—and, not at all coincidentally, some of the country’s busiest real estate markets.

It’s a simple equation: Hot job markets attract job seekers, and job seekers need a place to live … read more —>  http://www.realtor.com/news/trends

Condos Outpacing Single-Family Homes in Appreciation

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Condos are appreciating faster than single-family homes in markets across the U.S., especially where job markets are thriving or urban renewal is underway, according to the third quarter Zillow September Real Estate Market Report. Condos in the U.S. are appreciating at a rate of 5.1 percent, compared to the 3.7 percent appreciation among single-family homes.

Condo values crashed hard during the housing bust that kicked off the Great Recession. From the pre-recession peak to the lowest value, the median U.S. single-family home lost 20 percent of its value; from peak to bottom, the typical U.S. condo lost 33.2 percent of its value.

The housing market has since bounced back, and condos have finally caught up to other homes. In September, according to Zillow’s data, they are appreciating faster than single-family homes in nearly two-thirds of the top 35 most populated housing markets … read more —> http://zillow.mediaroom.com/

4 Reasons To Buy A Condo… And 4 Reasons Not To

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If you’re buying your first place, moving to a city where high density is the deal, or perhaps moving down and looking for more of a lock-and-leave lifestyle, a condo probably seems like a good bet. And, for many, it is. But is it really right for you?

Condo living is a commitment – to close quarters with your neighbors, to elevator rides to walk the dog if you’re in a high rise, to muddled voice and footsteps from above if you don’t have great insulation. Which might all be a worthy tradeoff for letting someone else handle the maintenance and being able to go from renter to owner. Want to see if condo living is for you? Read on.

4 Reasons TO Buy a Condo

1. It’s less expensive than a house

One of the main draws of condo living is the affordability. Of course, that’s relative to the area, the square footage of the unit, the desirability, and a number of other factors.

“Obviously, the cost of a condo versus a house depends on the size of the home, the property values of the neighborhood and the cost of living in the area,” said US News. “But typically, you’ll spend less on a condo, ‘especially in higher-cost markets where condos can be the only alternative to high-priced, single-family homes,'” says Amy Tierce, a regional vice president with Wintrust Mortgage in Needham, Massachusetts.”

2. Lower maintenance

If you don’t want to have to water the flowers or mow the lawn, condo living can offer a distinct advantage. You generally won’t have outdoor space to worry about unless you purchase a detached condo, and, in most cases, the Homeowner’s Association takes care of any exterior and common area maintenance, including any landscaping in the front of your place.

“For busy home owners, not having to actually deal with the upkeep and looks of their home can be a very good thing,” said Street Directory. “You have the benefits of home ownership, without all the responsibilities that go along with owning property.”

3. It’s all yours

Yes, some condos can feel apartment-like. But it’ll feel much more like a home once you’ve put your personal spin on it. Your landlord may not have let you paint or change out fixtures, but in your own place, you’re only limited by your imagination – and your budget.

4. For the amenities

You may be looking at luxury hotel-like condos that offer a fitness center, doorman, or valet (or all of the above). Or perhaps you’d prefer a large pool, sundeck, and clubhouse. Amenities that are standard in many condos offer buyers the opportunity to enjoy a taste of the resort lifestyle—something they probably wouldn’t find in a single-family neighborhood.

4 Reasons NOT to Buy

1. Traditionally, condos appreciate more slowly than singe-family homes

Real estate buyers aren’t typically drawn to places that don’t offer a great value. But condos may not compare to single-family homes when it comes to building equity.

“Condominiums often appreciate in value much slower than single-family homes,” said Money Crashers. “This is because you don’t own any land, which is the biggest driver for appreciation. Instead, you only own the living space. There’s a big difference.”

2. Common walls

Have kids, dogs, a loud voice, or a late-night TV obsession? You may bug your neighbor to the point that it’s uncomfortable for you both to live there. Or, they may bug you! If you’re worried about common walls, do your research:

  • Listen up – Ask your Realtor to schedule a visit during the dinner hour or on a weekend so you can get a good feel for the noise and activity level
  • Ask around – The neighbors should be honest about the living conditions
  • Inquire within – If it’s a newer community, you may be able to find out from the builder if the insulation is upgraded to your standards

3. You want a yard

You might be able to find a pocket of grass and a mini patio, but if you’re looking for ample outdoor space, single-family is the way to go.

4. It might actually be more expensive

With a condo, you may have higher interest rates depending on your loan, plus monthly HOA fees that can be hundreds of dollars. And, US News warns to beware of condos that don’t have their finances in order.

“Some condos are underfunded and therefore have no money in reserves to pay for capital improvements such as concrete and wood repair, painting or roofing,” they said. That could create a situation where each of the owners is assessed to pay for the repairs.

courtesy of:  http://realtytimes.com/consumeradvice/

Returning Equity Boosts Real Estate Markets

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Real estate equity is making a comeback, according to a blog post by RealtyTrac. While the market has not made a full recovery yet, there’s evidence that the housing market has become more attractive in most metro areas.

According to the Federal Reserve, homeowner equity peaked in 2005 when the value of U.S. homes — market value less debt — equaled a rosy $13.1 trillion. Unfortunately things went downhill from there as a result of the financial crisis, by 2011 homeowner equity had fallen to $6.4 trillion and millions of American homeowners saw half their real estate equity disappear.

This was not just an academic matter. Without equity, borrowers could not refinance as rates fell and they couldn’t sell without bringing cash to closing. The alternatives were short sales, foreclosures, and staying in place. In the end, more than 7 million homes were lost to foreclosure.

Now the good news: Between 2011 and 2014 homeowner equity went from $6.4 trillion to $11.3 trillion. That’s an increase of $4.9 trillion. With any luck it’s not unreasonable to believe that equity as measured on a cash basis might return to 2005 levels in the next year or so.

More equity means more homeowner options. Qualified owners can now borrow against their homes, borrow more than a few years ago or do nothing and avoid additional debt.

Read more —>  http://www.realtytrac.com/news/home-prices-and-sales/returning-equity-boosts-real-estate-markets/

Existing Home Sales to Finish 2015 at Record Level

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Existing home sales are expected to finish the year at their highest level since 2006, the National Association of Realtors’ economic forecast forum revealed at its 2015 Legislative Meetings & Trade Expo.

However, accelerating price growth and rising mortgage rates have the potential to change this.

Both Lawrence Yun, chief economist of NAR, and Robert Dietz, vice president of tax and market analysis at the National Association of Home Builders, shared their perspective on what’s going on in the housing market.

In the most recent existing-homes sales report, sales surged to their highest annual rate in 18 months, showing a promising beginning to the spring homebuying season.

read more —>  http://www.housingwire.com/articles/33912

Real Estate Likely to Ride a 3-Year Wave

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The real estate industry is expected to strengthen this year and continue to get stronger through 2017, according to a new report released from the Urban Land Institute Center for Capital Markets and Real Estate, which is based on a survey of the industry’s top economists and analysts.

Survey respondents said that the residential, single-family housing sector remains in recovery mode and economists predict that housing starts will rise from 647,000 in 2014 to 700,000 in 2015; to 815,000 in 2016; and 900,000 by the end of 2017.

Economists predict that existing home prices will rise through 2017 — rising 5 percent this year; another 4 percent in 2016; and by 4 percent in 2017.

“In summary, almost all U.S. real estate participants would be very pleased if the future unfolded as predicted by the ULI consensus forecast,” says ULI leader William Maher, director of North American strategy for LaSalle Investment Management in Baltimore. “The forecast represents almost the perfect combination of strong economic and property market fundamentals, combined with an orderly wind-down of monetary stimulus.”

Although an economic downturn could throw off these predictions, as well as interest rate spikes or oversupplies, “real estate pros predict three more years of smooth sailing for U.S. real estate,” Maher adds.

Survey respondents were also upbeat with their forecasts for the commercial market, including:

  • Office sector: Respondents expect rental rates in office space to rise 4 percent this year, 4.1 percent in 2016, and 3.5 percent in 2017.
  • Apartments: Respondents expect rental rates continue to push upward, rising by 3.5 percent in 2015, 3 percent in 2016, and 2.7 percent in 2017.
  • Retail: Analysts expect that rental rates in the retail sector to rise by 2 percent in 2015, 3 percent in 2016, and 2.9 percent in 2017.
  • Industrial/warehouse: Analysts expect rental rates in the warehouse sector to rise by 4 percent this year, 3.8 percent in 2016, and 3.1 percent in 2017.

courtesy of:  http://realtormag.realtor.org/daily-news/

Apartment Rents Posed To Rise During 2015

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Living in an apartment? Expect your rent to go up again.

Renting has gotten increasingly expensive over the last five years. The average U.S. rent has climbed 14 percent to $1,124 since 2010, according to commercial property tracker Reis Inc. (Nasdaq: REIS).

That’s four percentage points faster than inflation, and more than double the rise in U.S. home prices over the same period.

Now, despite a surge in apartment construction, rents are projected to rise yet another 3.3 percent this year, to an average $1,161, according to Reis.

While that’s slower than last year’s 3.6 percent increase, the broader upward trend isn’t going away.

“The only relief in sight is rents in the hottest markets are going to go up at a slower pace, but they’re still going to go up,” says Hessam Nadji, chief strategy officer at Marcus & Millichap, a commercial real estate services firm.

The main reason: More people than ever are apartment hunting.

Young people who have been living with their parents are increasingly finding jobs and moving out.

Rising home prices are leading many long-time renters to stay put.

In addition, most of the new apartments coming on the market are aimed at affluent tenants and carry higher-than-average rents. That’s especially true in cities where new buildings are going up in urban core areas, which means builders need to recoup higher land and development costs.

Consider Denver, where rents have increased more than 5 percent a year since 2010 ó 9.2 percent in 2014 — according to Marcus & Millichap.

Of the 9,400 new apartment units added last year, 23 percent were in urban core areas.

Competition for apartments means renters are less likely to be able to negotiate with landlords, or win concessions such as a free month’s rent.

read more —> http://www.sddt.com/news/article.cfm?SourceCode=20150414tdc&_t=Why+apartment+rents+will+rise+again+this+year#.VS7-qf10y00

Freddie Mac – Mar 2015 Economic & Housing Market Outlook

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(Marketwired – Mar 11, 2015) – Freddie Mac released today its U.S. Economic and Housing Market Outlook for March, highlighting some of the positive tailwinds at the start of the spring homebuying season.  A video preview, along with the complete March 2015 U.S. Economic and Housing Market Outlook and forecast table, is available here.

Outlook Highlights

  • Expect 2015 to be the best year for home sales and new home construction since 2007 when total home sales were about 5.8 million for the year.
  • Improved job prospects have started to drive those aged 25-34 back to the labor force, with 76.8 percent employed as of last month, up from 75.9 percent last year.
  • Expect rising rents at or above inflation in 2015 to push more would-be homeowners into the market. Rents increased an average of 3.6 percent in 2014 and nearly 11 percent over the last three years.
  • Due to some recent upward pressure on Treasury bond yields, the 2015 forecast for the average 30-year fixed-rate mortgage was increased slightly to 4.0 percent for the year.

courtesy of:  http://freddiemac.mwnewsroom.com/press-releases/

Fannie Mae Exec: San Diego Poised for Growth

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High wage job growth and millennials forming their own households should pace local demand for apartments in the coming year, a Fannie Mae executive said in San Diego on Monday.

“Just the demographics continue to be in favor of new renters entering the space and with new renters comes demand, and it means that vacancy rates are low and will continue to be low,” said Jeff Hayward, who heads the government-sponsored enterprise’s multifamily mortgage business. “All the fundamentals at the moment are in line for us to have a great 2015.”

Hayward said millennials, those between 24 and 35, are beginning to rent apartments. Additionally, more people are moving into San Diego than leaving because of broad-based job growth. In all, it makes for an increase in demand for rental units. Hayward, speaking to reporters at the Commercial Real Estate Finance Multifamily Housing Convention at the Manchester Grand Hyatt, said these factors are indicative of the real estate market now going through some of the best times it’s going to have.

The pickup began in the latter parts of 2014, which Hayward said started slowly. Investors got off the fence when interest rates fell toward the end of the year, he said. Fannie Mae, which securitizes mortgages into mortgage backed securities, therefore increasing the number of lenders, announced Monday that it provided $28.9 billion in financing to the multifamily market in 2014. That’s up about $100 million from 2013, and well above the $17 billion the activity bottomed out at in 2010, just after the Great Recession.

“If you look at anybody’s forecast, the market will be a pretty large market this year,” Hayward said. “And as long as our lenders are there sharing risk with us we’re going to be there with them.”

In San Diego County, the roughly 4,500 building permits for multifamily units about doubled those for single family homes, census data shows. Hayward said Fannie Mae’s economists are finding that more people want to live in walkable urban areas, such as downtown San Diego. Hayward said the region is poised for continued growth in multifamily housing.

“You’re still going to have job growth here even though in the defense sector you’re going to have some cutbacks,” he said. “This really is a pretty robust economy. There’s net in migration, so there’s more people coming to this area. Anytime you have more people coming to the area you’re going to have a bit more demand, so I think this is really the classic supply-demand, there’s not as much supply as maybe need be.”

With the higher demand and lower vacancy rate, the average rents in the county are expected to increase. Last year, CBRE projected the average rent would rise 19 percent through 2019 to $1,830 per month.

courtesy of:  http://www.utsandiego.com/news/

Housing Is About 75% Back To Normal: Trulia Report

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The U.S. housing market continues to improve, but it’s not quite there yet.

In fact, it’s about three-quarters of the way back to, “normal.” That is the conclusion of a new report from Trulia, a real estate sales and analytics company. The dispatch weighs existing home sales and prices, new construction, mortgage delinquencies and the millennial employment rate.

Existing homes, both sales and prices, appear to be leading the overall recovery. Trulia gauges that they are both 82 percent back to normal levels, compared with a year ago, when they were just 73 and 66 percent recovered, respectively.

read more —>  http://www.cnbc.com/id/102341697

U.S. Single-Family Starts Hit 6-1/2 Year High in Dec

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U.S. housing starts rose more than expected in December as groundbreaking for single-family homes hit its highest level in more than 6-1/2 years, in a hopeful sign for the sluggish housing market recovery.

Starts increased 4.4 percent to a seasonally adjusted annual pace of 1.09 million units, the Commerce Department said on Wednesday … starts

For all of 2014, groundbreaking increased 8.8 percent to 1.01 million units, the highest since 2007 …

Single-family homes starts, the largest part of the market, jumped 7.2 percent to a 728,000-unit pace, the highest level since March 2008. Groundbreaking on single-family projects in the West hit a seven-year high, while starts in the Midwest were the highest since December 2011.

read more —>  http://www.cnbc.com/id/102352190

Freddie Mac 2015 Projections

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A pickup in household formations and overall housing activity depends greatly on the pace of economic growth. The good news for 2015 is that the U.S. economy appears well poised to sustain about a 3.0 percent growth rate in 2015—only the second year in the past decade with growth at that pace or better. There are several reasons for the expected better macroeconomic performance. Governmental fiscal drag has turned into fiscal stimulus, lower energy costs support consumer spending and business investment, further easing of credit conditions for business and real estate lending support commerce and development, and more upbeat consumer and business confidence, all of which portend faster economic growth in 2015. And with that, the economy will produce more and better paying jobs, providing the financial wherewithal to support household formations and housing activity ….

So, what will be some of the market features for 2015?

Interest rates

… We expect to see interest rates climb throughout 2015, averaging about 2.9 percent for 10 year Treasuries and 4.6 percent for 30-year mortgages …

Prices & Affordability

In addition to rising interest rates, we also expect house price gains to continue, albeit at a more moderate pace. Our current projection is for annual house price gains to slow from 9.3 percent in 2013, to 4.5 percent in 2014 and 3.0 percent in 2015 …

Home Sales/Starts

Look for housing activity to accelerate in 2015. We’re forecasting total housing starts to increase by 20 percent from 2014 to 2015. We’re also expecting to see total home sales increase by about 5 percent over that time period …

Single-family Originations

Increasing home sales are good news for mortgage Markets … We expect originations will fall an additional 8 percent from 2014 to 2015, before rising home values and increasing purchase originations finally offset the decline in refinance volume and drive originations higher.

Rentals in Demand

Rental markets are expected to remain tight in most urban markets across the U.S. … As household formations pickup in 2015, rental apartments will generally be their first home. Rental vacancy rates remain at or near their lowest level since 2000, and rent growth exceeds inflation in most markets. That has prompted new development and property value gains, which has led to property sales and new mezzanine debt …

read more –>  http://www.freddiemac.com/finance/pdf/November_2014_public_outlook.pdf

San Diego: No 1. Pleasant Place to Live in USA

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Zillow uses climate to rank 25 best in America

Stop the presses! San Diego is America’s most “pleasant” place!

The locals know that – that’s why we’re here and (for the most part) not moving.

But maybe the rest of the world needs a reminder as snow storms elsewhere snarl holiday traffic.

Zillow, the real estate website, has done local boosters a favor and ranked the best places, based on NOAA’s raw weather data collected by engineer and designer Kelly Norton, a cofounder of Homebase.io.

San Diego ranked No. 1 with 261 “pleasant” days, defined as having an average temperature between 55 to 75 degrees, minimum temperature above 45 degrees and no significant rain or snow.

“Jeez, it’s a shock,” said Joe Terzi, head of the local tourist bureau. “It took Ph.D’s to figure out that San Diego has the best weather in the country.”

He plans to send out a proper press release to share the “news.”

But he said it’s not enough to just have nature’s blessings. San Diego has many things to do besides soak up the rays.

“The big thing we continue to talk about and believe strongly in is that San Diego is a happy, inviting, friendly place to be and that’s why we have 34 million people come here every year,” Terzi said.

Iris Engstrand, a history professor at the University of San Diego, said this place has beckoned outsiders since 16th century European explorers first arrived. But fun sometimes interferes with serious business.

“Our students at the university are out surfing instead of studying for finals,” she said. “We have to work at working indoors.”

Of course, weather doesn’t guarantee a good life.

Zillow said San Diego has the fourth most expensive housing market, based on the percentage of income devoted to a mortgage for a first-time homebuyer.

“There are a lot of reasons that make places great to live, not all inherently connected to weather,” said Zillow senior economist Skylar Olsen. “For example, the best economies that are having booms or were very stable during the housing bubble and bust were in Texas. Those are economies driven by the energy market, oil and gas.”

Kelly Cunningham, economist at National University System’s Institute for Policy Research, said he moved to San Diego from snowbound Colorado but acknowledged there’s a price to pay for living in “paradise.”

“You don’t get paid quite as well,” he said. “It’s sort of like a discount for being able to live here that wages are not as high as they are in some other places where they probably have to pay people more to live there.”

And yet, he noted, San Diego has grown its share of hometown billionaires, who moved here and grew successful businesses in spite of the siren call of sun, sand and surf.

“It worked for Irwin Jacobs,” he said of the Massachusetts-born Qualcomm cofounder.

courtesy of:  http://www.utsandiego.com/

HUD Secretary: Housing Finance Reform Remains Top Priority

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HUD Secretary Julian Castro said Monday that overhauling the mortgage finance system remains a top priority for the final two years of the Obama administration.

Castro suggested that the next Congress consider legislation that would wind down and eventually eliminate mortgage giants Fannie Mae and Freddie Mac as part of the effort to boost the housing market’s recovery.

“This could be, I believe, a good victory either in the lame-duck session or, more realistically, perhaps in the next term of Congress where there is bipartisan support for housing finance reform, for doing away with Fannie and Freddie as we’ve known them, creating a backstop,” he told Bloomberg Television.

The Senate has generated two bipartisan bills, including one by Senate Banking Committee Chairman Tim Johnson (D-S.D.) and ranking member Mike Crapo (R-Idaho) that gained approval by the panel in May.

But, since then, there has been little movement to get a bill through Congress.

“Introducing more private capital into the market and taking the taxpayers off the hook if we do ever experience what we just went through  as part of the housing crisis in 2007, 2008, 2009, that is a priority this administration and for HUD,” Castro said.

read more —>  http://thehill.com/policy/finance/224429-hud-secretary-says-housing-finance-reform-is-top-item-for-obama-administration

Single-Family Housing Poised to Take Off in 2015

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A growing economy, rising household formations, low mortgage rates, and pent-up demand will help single-family housing production rev up in 2015, while a growth in renters will keep the multifamily market at cruising altitude or higher, according to economists who participated in the latest National Association of Home Builders (NAHB) 2014 Fall Construction Forecast.

NAHB is forecasting 991,000 total housing starts in 2014, up 6.6 percent from 930,000 units last year.

Single-family production is expected to rise 2.5 percent this year to 637,000 units, increase an additional 26 percent next year to 802,000, and reach 1.1 million in 2016.

Setting the 2000-2003 period as a benchmark for normal housing activity when single-family production averaged 1.3 million units annually, single-family starts are expected to steadily rise from 48 percent of what is considered a typical market in the third quarter of 2014 to 90 percent of normal by the fourth quarter of 2016.   More info —> 

courtesy of:  http://www.nahb.org/

S.D. a Top-Tier City for Apartment Investing

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In a separate report, the USC Lusk Center for Real Estate released its Casden Real Estate Economics multifamily forecast, saying San Diego’s vacancy rate had dipped to “an almost absurd 2.3 percent” in the second quarter, based on projects of 15-20 units.

The USC Lusk Center will hold an executive forum on real estate prospects Oct. 9 at the W San Diego Hotel, 421 W. B St. in downtown San Diego. Sullivan will moderate. Information is available online atlusk.usc.edu.

Rents had increased in all 15 submarkets analyzed and a net 1,490 units had been rented in the quarter ending June 30.

“Overall, these dynamics point to an increase in the demand for multifamily rental housing,” Casden said, “and a tightening rental market.”

The highest rent increase over the last year occurred in the Mira Mesa-Rancho Bernardo area with a 3.5 percent rise to $1,637. The area between Hillcrest and Normal Heights rose the least, up 1.8 percent to $1,081.

Vacancies ranged from 12.7 percent in the area between Clairemont and Mission Valley to 0.9 percent in the Mission Beach-Pacific Beach area.

The Casden forecast for San Diego shows a 2.9 percent rental increase over the next year with El Cajon, Santee, Lakeside, Ocean Beach and Point Loma going up the most.   (read more —> )

courtesy of:  http://lusk.usc.edu/news/

Homeownership Still Holds Promise For 90% of Americans

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A new survey shows the vast majority of Americans still regard homeownership as a “highly desirable goal,” despite lingering effects of the housing crisis in the market. The results stem from the latest COUNTRY Financial Security Index® survey and overall it was found that Americans are feeling more optimistic, likely due to an improving economy and labor market.

Making sense of the story

  • The survey found that 89 percent of Americans feel that buying a home is an important part of achieving the American Dream.
  • Furthermore, 64 percent of respondents expressed belief that owning a home is an attainable goal for a typical middle-income family, a significant improvement over last year, when just 41 percent said the same.
  • There was a generational split on opinions regarding whether or not the goal of homeownership is achievable. Respondents among the ages of 30–39 and ages 50–64 were most likely to be negative in that regard, with 26 percent and 20 percent, respectively, saying owning a home is not an attainable goal for a middle-income family.
  • Among non-homeowners, a quarter of those under age 30 and a fifth of those ages 50–64 said they have no interest in owning a home.
  • For those who currently don’t own a home, financial limitations represent some of the biggest barriers to homeownership. Fourteen percent say a low credit score is the primary obstacle.
  • Americans also cite a lack of a down payment (13 percent) and the price of homes in the area (12 percent) as impediments to homeownership.
  • More than half (56 percent) say their home is a long-term investment of 10 years or more to help fund retirement goals. Half of Americans also said they would avoid taking out a home equity loan unless absolutely necessary.

courtesy of:  California Association Of Realtors

30-Year Fixed-Rate Mortgage Hits Year’s Low

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Freddie Mac (OTCQB: FMCC) today released the results of its Primary Mortgage Market Survey® (PMMS®), showing average fixed mortgage rates following bond yields lower. Averaging 4.10 percent for the week, the 30-year fixed-rate mortgage fell below its previous 2014 low of 4.12 percent.

News Facts

  • 30-year fixed-rate mortgage (FRM) averaged 4.10 percent with an average 0.5 point for the week ending August 21, 2014, down from last week when it averaged 4.12 percent. A year ago at this time, the 30-year FRM averaged 4.58 percent.
  • 15-year FRM this week averaged 3.23 percent with an average 0.6 point, down from last week when it averaged 3.24 percent. A year ago at this time, the 15-year FRM averaged 3.60 percent.
  • 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 2.95 percent this week with an average 0.5 point, down from last week when it averaged 2.97 percent. A year ago, the 5-year ARM averaged 3.21 percent.
  • 1-year Treasury-indexed ARM averaged 2.38 percent this week with an average 0.5 point, up from last week when it averaged 2.36 percent. At this time last year, the 1-year ARM averaged 2.67 percent.

Average commitment rates should be reported along with average fees and points to reflect the total upfront cost of obtaining the mortgage. Visit the following links for the Regional and National Mortgage Rate Details and Definitions.  Borrowers may still pay closing costs which are not included in the survey.

courtesy of:  http://freddiemac.mwnewsroom.com/

What YOU SHOULD KNOW About Housing Affordability

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Is it the right time to buy a house?  Is it the right time to sell?  How do you know when to jump into the real estate market?  The answer is….it depends.  There’s no single answer that applies to everyone.  A host of factors come into play, including the economy in general, whether home prices are rising or falling, the inventory of available homes, and the state of your own financial outlook.  If you’re thinking about buying or selling a home, here are some factors to consider.

For Buyers:

Improving Economy, Rising Prices, and Eager Buyers:

The rebound in the economy means more competition for homes because people who have been renting or staying put in their homes are now jumping into the housing market. This translates into quick turnover on home sales, multiple bids, and sometimes, buyers bidding over the asking price. The boost in housing prices is also fueling competition from buyers who want to get into the market before prices get too high. Even though prices are rising, many still consider some homes underpriced since prices had dipped so low. And buyers are looking to make a move while houses are still relatively a good deal.
FHA Fee Changes:

Loans through the Federal Housing Administration (FHA) were historically the best bet for people with low to moderate incomes and not much money to put toward a down payment. Generally, private lenders require a 5% down payment, while FHA only requires 3.5%. However, with several changes to loan terms, FHA may no longer be the smartest option.
FHA loans require mortgage insurance, a fee tacked onto the loan that provides the lender some protection in case the borrower defaults on the loan. In the past, the borrower only needed to carry the insurance until the loan reached 78% of the original loan amount. Under the new rules, the borrower is required to carry the insurance for the life of the loan.
The cost of mortgage insurance on FHA loans has also been on the rise, almost tripling since 2008. In 2013, the fee rose to 1.35% of the balance of the loan. Additionally, FHA loans require borrowers to pay an upfront fee of 1.75% when getting the loan. Between the upfront fee and the required mortgage insurance, saving up more for a down payment and getting a private mortgage may make more financial sense.
Beyond FHA:

Buyers with a low down payment have other options to consider. Fannie Mae HomePath loans, available only on Fannie Mae-owned properties, offer low down payments and no mortgage insurance requirement. Periodically, Fannie Mae also offers special deals in which they cover the buyer’s closing costs. There also loans available to people in various special circumstances. Veterans, for example, can get VA Mortgages, which offer good terms, low down payments, and easier qualification requirements. The USDA offers attractive mortgage terms to moderate-income families buying property in rural or semi-rural areas.
Check Other Affordability Programs:

The Good Neighbor Next Door program offers discounts of homes in “revitalization” areas of up to 50% for qualified fire fighters, law enforcement officers, EMTs, and teachers. Check with state and local housing agencies to see what programs are available in your area. Check http://www.usa.gov for links and other home buying help and information.
Mind Your Debt:

Having a large amount of debt in relation to your income will lower your chances of getting a loan with favorable terms, or even getting a loan at all. Private lenders generally have more stringent rules for debt-to-income ratio (DTI). There are two kinds of DTI–how much personal debt you can carry in relation to your income (e.g. car loans, student loans, child care expenses) and income versus the amount you will be spending on housing debt (e.g. mortgage payments, property taxes, insurance and so forth.) Lenders take both into consideration. Would-be borrowers who want private financing generally need to have less than 45% of their income going towards personal debts, while FHA will finance borrowers who have up to about 56% of their income allocated for debt payment. Borrowers can qualify for an FHA loan with up to 47% of their income slated for housing costs, while conventional lenders generally allow only up to 38-40%.

For Sellers:

Rising Home Prices:

House prices are rebounding from the downturn, and 2014 is shaping up to be a seller’s market. Rising home prices are a boon to sellers who can expect faster sales, multiple full-price offers and even offers above their asking price.
Starter Homes in Demand:

If you have a starter home and are looking to upsize, the market is especially in your favor. Starter homes are in short supply because during the economic downturn, people were buying and selling less frequently. Now that the economy is improving, there’s a lot of pent-up demand, especially for people looking for inexpensive housing or a starter home.
Fewer Underwater Mortgages, More Equity:

The nationwide trend of rising home prices means other good news for sellers. The boost in prices is finally lifting many homeowners from their underwater mortgages and giving others more equity in their homes. More equity means more owners will have the money for a down payment and closing costs if they’d like to move up to something pricier.
Time to Refinance?:

Rising prices will also raise the appraised value of many homes, meaning it may be a good time for homeowners to refinance. Higher appraisals may help you get more favorable terms on a first mortgage or refinance the rolling of a second mortgage into one stable, fixed-rate mortgage.

courtesy of:  http://www.clientdirect.net/

 

What Is Appraised Value?

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Appraisals provide an objective opinion of value, but it’s not an exact science so appraisals may differ.

For buying and selling purposes, appraisals are usually based on market value – what the property could probably be sold for. Other types of value include insurance value, replacement value, and assessed value for property tax purposes.

Appraised value is not a constant number. Changes in market conditions can dramatically alter appraised value.

Appraised value doesn’t take into account special considerations, like the need to sell rapidly.

Lenders usually use either the appraised value or the sale price, whichever is less, to determine the amount of the mortgage they will offer.

courtesy of:  realtor.org

10 Countries Racing to Buy American Homes

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International homebuyers are attracted to the United States for a number of reasons. These include favorable housing prices, good weather, the country’s relative economic stability and an attraction to America in general. As the housing market improved and home prices rebounded, the interest of foreign buyers in U.S. properties has soared.

Interest in U.S. property increased dramatically in a number of countries between 2009 and 2013. In all, interest in home buying, according to housing market firm RealtyTrac, increased by 95% or more in 10 countries, and at least doubled in nine of these nations. Interest in U.S. property by residents of the United Arab Emirates rose 352%, the most out of any country. Based on subscription data provided by RealtyTrac, these are the 10 countries where interest in buying American homes is on the rise.  (read more —> http://www.usatoday.com/story/money/business/2014/04/12/countries-buying-american-homes/7586991/ )

courtesy of:  http://www.usatoday.com/

3 Major “Need to Know’s” About The 2014 Housing Market

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The following list was put together by a veteran housing economist, asked by HousingWire for his opinion on the near-term future of the markets we cover daily.

(David Berson is the chief economist at Nationwide. He leads a team of economic analysts delivering economic forecasts and analyses that are used to inform and strengthen the organization’s business strategies and operating plans. Prior to joining Nationwide, David served as the chief economist at The PMI Group and for Fannie Mae.)

Here’s David Berson’s take on the 3 things you need to know about housing in 2014.

No. 1: 2014 should prove to be the strongest year for housing activity since before the Great Recession.

Housing activity (home sales and housing starts) has increased modestly over the past several years, but is still at levels well-below sustainable trends. For both economic and demographic reasons, 2014 should be the year when activity reaches the highest level since 2006/2007.

Propelling home sales are job growth and housing affordability. The latter reflects the interplay of household income, mortgage rates and house prices. In 2013, while housing activity picked up, it was a year when job growth remained low and virtually unchanged from the previous year.  Moreover, affordability, while still high, fell sharply in the second half.

Most economists expect an improved job market in 2014, with employment growth accelerating and the unemployment rate continuing to decline. That jobless rate drop will reflect more of a pickup in employment than further declines in the labor force participation rate. This will be the key factor improving housing demand this year, even if mortgage rates rise and affordability declines. While the housing market tends to do especially well when the job market improves and mortgage rates decline simultaneously, that combination of events occurs only rarely.

More often, either job gains accelerate while mortgage rates rise, or job gains decline while mortgage rates drop. Typically, housing activity expands in the former case and contracts in the latter. People buy homes when their job and income prospects improve – even if it’s more expensive to do so – rather than buy when it is inexpensive to do so but they’re worried about keeping their jobs.

No. 2: Demographics should start to favor housing activity.

The demographic factor most affecting the housing market is household formations. Newly formed households may buy or rent, but they reside somewhere as an independent unit. On average, roughly 1.2 million households form every year in the United States and they each demand a housing unit. Household formations are affected by the job market, as people “double-up” when worried about their job and income-earning prospects. The Great Recession and the modest job recovery in the years following induced many people who might have lived independently to move in together. That’s most noticeable in the rise in the share of young adults living with their parents, primarily because of the weak job recovery.

Reflecting the slow pace of household formations, there is an increasing pent-up demand for households. After all, most of these young adults would prefer the freedom of being on their own (and their parents really don’t want them as full-time residents, either). We estimate the economy is short by more than three million households.

If the economy expands at a faster pace this year, bringing a more rapid rate of job creation, that should translate into more households, raising housing demand. We won’t see all three million missing households return to the housing market at once. (That wouldn’t be a good thing for the housing market anyway, since that would be on top of the 1.2 million households that normally would develop this year; such a surge would swamp the existing housing supply). Beginning in 2014, the pace of household formations should accelerate to an above-trend pace for several years, pushing up housing demand.

No. 3: Mortgage availability shouldn’t worsen and may improve.

Mortgage credit isn’t nearly as easy to get as it was during the housing boom, and it shouldn’t be.  Still, compared with recent years, mortgage availability has increased slightly. And reasons exist for mortgage availability to be no worse in 2014 than in the past few years. Actually, it may be somewhat easier to get a mortgage loan.

With the dislocations in mortgage lending since the housing bubble popped, Fannie Mae and Freddie Mac have increased their share of the mortgage market significantly. When combined with lending from the Federal Housing Administration and the Veteran’s Administration, the government or government-sponsored share of mortgage lending has climbed to more than 90 percent in recent years. That is an untenable situation in the long run, but is unlikely to change much this year.

The good news is that new Qualified Mortgage lending rules from the Consumer Financial Protection Bureau exempt home mortgages that qualify for purchase or securitization from Fannie and Freddie. As a result, mortgage lenders won’t have to tighten their mortgage-underwriting requirements in response to QM as long as they sell their loans to the GSEs.

Additionally, the rise in mortgage rates already has reduced mortgage origination volumes as refinance activity declines. If mortgage rates rise further this year, as expected, then refinance activity will fall still more. In response, mortgage lenders probably will ease lending standards to the extent possible under the QM rules to boost lending activity by increasing purchase originations. As a result, the increase in new households expected to be created this year, spurred by a stronger job market, should find that qualifying for a mortgage loan will be somewhat easier in 2014 than in prior years.

courtesy of:  http://www.housingwire.com/

Millionaires See Real Estate as Top Investment for 2014

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U.S. millionaires see real estate as the top alternative-asset class to own this year, according to Morgan Stanley.

About 77 percent of investors with at least $1 million in assets own real estate, according to a survey released today by the New York-based investment bank’s wealth-management unit. Direct ownership of residential and commercial properties was the No. 1 alternative-investment pick for 2014, with a third of millionaires surveyed saying they plan to buy this year. Twenty-three percent said they expect to invest in real estate investment trusts, the second-most popular choice.

Wealthy investors are turning to a rebounding real estate market as fixed-income yields remain historically low and equities surge. U.S. commercial-property values rose 8 percent in the 12 months ended Jan. 31, and have jumped 71 percent since hitting their post-recession bottom in 2009, research firm Green Street Advisors Inc. reported today. The S&P/Case-Shiller index of home prices in 20 cities is up 24 percent from its 2012 low.   (read more —>)

courtesy of:  http://www.bloomberg.com/news/

Record Rebound in Home Equity Gives Owners New Options

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WASHINGTON — The biggest story in American real estate in 2013 hasn’t gotten  the attention it deserves, so let’s shout this out: Homeowners’ net equity  holdings soared $2.2 trillion from the third quarter of 2012 to the third  quarter of this year, according to new data collected by the Federal  Reserve.

This is a record rebound for a 12-month period. And it’s crucially important  in personal financial terms for hundreds of thousands of owners who for years  have been underwater on their mortgages, meaning their homes wouldn’t sell for  enough to pay off the loan.

They now have options they didn’t have before: They can sell their homes and  not have to bring money to the closing. They may be able to borrow against their  equity to help pay for college tuition, home improvements and other purposes.  They may be able to refinance their mortgages without having to use a  government-aided program.

Home equity is the difference between the mortgage debt outstanding on a  residence and the current market value of the home. If your house is worth  $300,000 and you owe the bank $150,000 — whether from a single mortgage or  multiple loans — you have $150,000 in equity. If your mortgage debt totals  $350,000 on a $300,000 house, you have $50,000 in negative equity.

Equity generally grows in several ways: You lower your debt by making  payments to your lender, the value of your house increases because market  conditions improve, or you raise the home’s sales value by remodeling or  upgrading it.

Growing home equity not only signifies widespread recovery in household  personal wealth, but also provides an important boost for the ongoing economic  recovery. Consumers who have a cushion of equity in their homes are more likely  to spend money on goods and services than those who don’t. The latest Fed “flow  of funds” calculations show that owners have now seen their equity stakes grow  more than $3.2 trillion from the post-bust low point in the first quarter of  2011.

During the financial crisis of 2008-11, millions of American owners fell into  negative equity positions as the sale value of their homes plummeted. With the  recovery that took hold in 2012, values began to turn upward again —  dramatically so in some of the hardest-hit areas where prices had fallen  fastest.

A new study released by CoreLogic, an Irvine real estate and mortgage data  firm, estimated that 791,000 homes moved from negative to positive equity status  during the third quarter of this year alone, and more than 3 million have done  so since the beginning of 2013. Though 6.4 million homeowners continue to be  underwater on their mortgage debt — in 13% of all homes with a mortgage — that  is down from 7.2 million (nearly 15%) as recently as the end of the second  quarter of this year.

CoreLogic researchers found that among the states that experienced the most  severe property devaluations during the bust and have recovered impressively,  some continue to have persistent hangovers of negative equity. In Nevada, nearly  a third of all homeowners are underwater, despite price gains. In Florida,  nearly 29% are still in negative equity, and in Arizona it’s nearly 23%.

In California, which suffered deep equity losses in non-coastal areas from  2007 to 2010, home values have roared back in the last two years. Now the state  has just a 13% negative equity rate — significantly lower than Ohio (18%),  Michigan and Illinois (both 17.7%), Rhode Island (16.6%) and Maryland  (15.6%).

The states with the highest rates of homeowner equity are Texas and Alaska,  where 96.1% of all owners with mortgages are in positive territory; Montana  (95.8%); North Dakota (95.7%); and Wyoming (95.4%).

Other findings from the CoreLogic study:

•People with higher-priced homes are somewhat more likely to have positive  equity than owners of lower-cost houses. Whereas 92% of all mortgaged homes in  the country valued at more than $200,000 have positive equity, just 82% of homes  valued at or below $200,000 do.

•Though homeowner equity wealth has increased rapidly in the last year, 10  million homeowners still have only modest equity stakes — less than 20% — and  that puts them at risk should property values tumble again.

But another bust is nowhere in sight, thanks to tougher underwriting and  regulatory oversight. So whether you’re one of the recent arrivals to positive equity status, or you’ve enjoyed it all along, the new year looks  encouraging.

courtesy of:  http://www.latimes.com/business/realestate/