Case Shiller Price Index Shows An Annual Growth Rate Of Home Prices

Case Shiller Price Index Shows An Annual Growth Rate Of Home PricesHome prices were still gaining in July, but for 15 of 20 cities included the S&P Case-Shiller 10 and 20-city Home Price Indices, the pace of increasing home prices is slowing down. National home prices rose by 1.80 percent in July as compared to 2.20 percent in June.

Home prices grew by 0.60 percent from June to July on a seasonally-adjusted basis. This was the lowest month-to-month gain since September 2012.

David Blitzer, index committee chairman of S&P Dow Jones Indices, said that higher mortgage rates are hitting the housing market. Mr. Blitzer noted that mortgage rates rose by more than a percentage point between May and the Federal Reserve’s statement last week.

The Fed was widely expected to reduce its monthly bond purchases from $85 billion to $75 billion, but the Fed decided not to reduce its bond purchases as the economy has not recovered sufficiently.

Mortgage Rates Fall 

High home prices and unemployment are making it difficult for first-time and moderate income buyers to compete; buyers sitting on the sidelines are eventually expected to add to the demand for homes.

Mortgage rates fell after the Fed’s announcement, but Mr. Blitzer said that the drop in mortgage rates would likely have a temporary impact on housing. He said that the rate of increase [in home prices] may have peaked.

Conditions contributing to the run-up in home prices include a shortage of available homes and pent-up demand among home buyers. As of July, home prices for the Case-Shiller 20-city index increased by 12.40 percent year-over-year; this was the highest annual rate of increase since home prices peaked in 2006.

Home prices in the Case-Shiller 10-city index increased by 12.30 percent annually. In spite of the rapid price gains, July home prices remained 21 percent below their pre-recession peak.

Home prices in all 20 cities included in the 10 and 20 city indices increased on a month-to-month basis, with home prices increasing by 1.80 percent for the 20 city index and by 1.80 percent for the 10 city index.

Home Prices Show Strong Recovery

Las Vegas, Nevada had the highest annual gain in home prices for July with a 28 percent increase. Las Vegas was one of the cities hardest hit by the recession. Annual home prices for San Francisco, California rose by 25 percent, and New York City had the lowest annual growth rate for home prices at 3.50 percent.

The Federal Housing Finance Agency, which oversees Fannie Mae and Freddie Mac, released its home prices report for properties securing mortgage loans owned or backed by Fannie and Freddie. The annual growth rate for home prices was 8.80 percent as of July, but remains 9.60 percent lower than the peak growth rate reported in April 2007.

Highest Existing Home Sales Since February 2007

Highest Existing Home Sales Since February 2007Sales of existing homes reached their highest volume in almost six years in August. The National Association of REALTORS reported Thursday that sales of existing homes rose 1.70 percent in August to a seasonally-adjusted annual rate of 5.48 million existing homes sold.

This was the highest number of existing home sales since February of 2007.

August’s results exceeded estimates of 5.20 existing homes sold, which was based on July’s unrevised reading of 5.39 million existing homes sold.

The NAR also reported that the national median home price increased to $212,100 in August. This represents a year-over-year increase of 14.70 percent and was the largest annual increase in the national median home price since October 2005.

Sales concentrated in areas with higher home prices contributed to this significant increase in the national median home price.

Homebuyers Increase Despite Higher Home Rates

The reading for existing home sales in August suggests that homebuyers are not shying away from higher home loan rates; it may also indicate that the recent shortage of existing homes for sale is beginning to ease.

August’s higher number of existing home sales was attributed to home buyers anxious to lock in lower loan rates in an environment of rising mortgage rates. Also, economists had expected the Federal Reserve to begin reducing its monthly securities purchases, which did not happen.

Had the Fed tapered its securities purchases, long-term interest rates including mortgage rates, would likely have continued rising. The Fed may have decided not to reduce its monthly securities purchase in an effort to slow rising mortgage rates.

The average rate for a 30-year fixed rate mortgage has increased by more than one percentage point since May. Home buyers may respond to rising mortgage rates by delaying their home purchase to see if mortgage rates will fall, or they may rush to buy a home before rates go higher.

Mortgage Rates Affect Home Buyers In Three Ways:

1. As rates increase, monthly house payments also rise, which can impact affordability for first-time and moderate income buyers.

2. National unemployment rates remain higher than the Federal Reserve’s target rate of 6.50 percent. While home prices are increasing and other facets of the economy are showing improvement, jobless claims remain higher than average.

3. Mortgage credit requirements are strict; this keeps some would-be buyers from qualifying for a home loan.

These factors are offset by high demand for homes and short supplies of available homes and developed lots in some areas. 

What’s Ahead For Mortgage Rates This Week — September 23, 2013

What's Ahead For Mortgage Rates This Week – September 23, 2013Last week’s economic news was dominated by the Federal Reserve’s decision not to taper its $85 billion in monthly securities purchases.

Fed Chairman Ben Bernanke noted in a scheduled statement after the Federal Open Market Committee meeting that economic conditions were not yet adequately improved to withstand any decrease in the federal quantitative easing program.

The Fed also reaffirmed that the target federal funds rate would remain at 0.00 to 0.25 percent until the national unemployment rate reached 6.50 percent and inflation reaches 2.00 percent.

The national unemployment rate was 7.30 percent and the Fed projects that inflation will remain under 2.00 percent through 2015.

In both the FOMC statement and his press conference, Chairman Bernanke repeatedly emphasized that the Fed would take no action to reduce QE until the economy strengthens. No automatic reduction of QE purchases would take place without full consideration of the nation’s economy.

The QE program is intended to keep long-term interest rates low, and the announcement that QE would not be tapered brought mortgage rates down after they had increased by more than one percent since May.

Builder Confidence High, Mortgage Rates Lower

The National Association of Home Builders/Wells Fargo Housing Market Index for September revealed that home builder confidence in housing market conditions remained stable at 58; a reading of 59 was expected. Readings over 50 indicate that more builders are confident about market conditions than not.

Housing starts for August did not reflect the high level of builder confidence and fell short of expectations at 891,000. Expected housing starts were estimated at 921,000. There was good news in that August’s reading surpassed the July reading of 883 housing starts. Building permits for August also dropped to 918,000 against expectations of 955,000 and July’s reading of 954,000 building permits.

Higher labor and materials costs and concerns over tight mortgage credit and rising mortgage rates likely contributed to the lower than expected readings for housing starts and building permits.

Freddie Mac’s Primary Mortgage Market Survey reported that average mortgage rates dropped across the board on Thursday. The average rate for a 30-year fixed rate mortgage fell by seven basis points to 4.50 percent with discount points moving from 0.80 percent to 0.70 percent.

The average rate for a 15-year fixed rate mortgage fell by five basis points from 3.59 percent to 3.54 percent with discount points unchanged at 0.70 percent.

The average rate for 5/1 adjustable rate mortgage was lower by 11 basis points to 3.11 percent. Discount points were unchanged at 0.50 percent. This provides a break for home buyers who’ve been faced with rising mortgage rates and home prices amidst a shortage of available homes in many areas.

This Week

Economic news scheduled for this week includes the Case/Shiller Home Price Index for July, the FHFA Home Price Index also for July. New home sales and the pending home sales index will be released.

Freddie Mac will release its weekly summary of average mortgage rates and weekly jobless claims will also be released Thursday. The week will end with consumer related data including personal income and consumer spending for August along with the University of Michigan’s consumer sentiment index for September.

Quick Tips To Beat Out Cash Buyers

Quick Tips To Beat Out Cash BuyersYou’ve been searching for the perfect home for quite a while, and finally, you’ve found it! You get all of your finances in order and place an offer on the house.

However, you’re not the only one that loves the home, because there are multiple offers — and one of them is cash.

Cash buyers are seen as desirable because they’re almost always a guaranteed quick close. They don’t have to borrow money from a bank therefore won’t have any financing hang-ups, which is where a large portion of offers fall through. Don’t worry; not all hope is lost.

Follow the steps below to beef up your offer and get your foot in the door.

Less Expensive Homes

If you’ve put offers in on homes at the asking price and are continually beat out by buyers that are paying more, then you might want to consider looking in a lower price range. This is an especially smart strategy for those living in fast-selling markets. By looking at less expensive homes, you can be the one that puts in an offer over the asking price.

20 Percent Down Payment

Save up a higher down payment for the price range of homes you’re considering. If you can come up with 20 percent, then you’re in a position to wave the appraisal contingency for financing with the bank. The more you have in cash, the better.

Take-It-Or-Leave-It Home Inspection

This means that based on the home inspection, you’ll take the property with all its issues, or you’ll walk away. What you won’t do is ask the seller to waste more of their time and money fixing every little problem that’s found.

Fees

Waive the seller concessions, such as closing costs and the home warranty, and pay your real estate broker’s fees. These extra costs add up in the mind of the seller and will show that you really want the property.

Going up against cash buyers can be extremely discouraging. But, just because they’re dealing in cash doesn’t mean they’ll get the property. Many investors think they can put in a low offer because they’re dealing in cash.

So show you’re serious about a property, follow the steps above and put in your best offer. You’ll be a homeowner soon enough!

Tips For Buying A Home That Your Pets Will Love

Tips For Buying A Home That Your Pets Will LoveWhen you are buying a new home, it is important to take into consideration the four-legged residents that will be living there, as well as the two-legged ones. What things should you keep in mind if you are house hunting and you own a pet?

Layout Of The House

When you are looking at the house layout, think about how it will accommodate your pet. If you have an old dog that can’t climb stairs very well, look for a home that is mostly one level.

Cats like to have little alcoves and quiet spaces where they can hide away. Think about where you would put the kitty litter box or the food bowls so that they would be practical and would not get in the way.

Be sure to also look at the yard. Is it fenced, so that you can let your dog outside to run around? Is there an outside hose that you can use for bathing your pet?

Is there room for a dog house? You might also want to avoid a house near a busy road, in case your pet escapes and runs into traffic.

Pet Friendly Neighborhood

Take a look around the rest of the neighborhood. Do you see that many other people have dogs and cats? Are there a lot of friendly people out walking their dogs? Is there a vet, a pet shop and a dog park nearby?

When they see your dog or cat, do people smile and say hello? A neighborhood full of pet-friendly people is a great place for you and your furry friend to live, because you will feel welcomed. You might even make some new friends to go on walks with!

City Ordinances

It is a good idea to know about the local city ordinances when it comes to cleaning up after your pet. In many places, failing to scoop up your dog’s droppings when taking him for a walk can lead to a very expensive fine! This is a mistake that you don’t want to make when you move into a new home.

Clarify The Rules For Unusual Pets

Most people have dogs and cats, but if your animal companions are a little less common, you might need to check the rules. If you own a goat, chicken, donkey, sheep or any other farm animal as a domestic pet, check with the proper officials about the zoning regulations and ordinances in the area you are buying your home.

These are just a few things to consider on behalf of your pet when you are buying a home. For more real estate advice, contact your real estate professional.  

Home Builder Confidence Has Far Outpaced Actual Home Construction

Home Builder Confidence Has Far Outpaced Actual Home ConstructionHome builder confidence was unchanged for September according to the National Association of Home Builders/Wells Fargo Housing Market Index HMI released Tuesday. After four months of rising confidence, September’s HMI reading came in at 58, which was not far from expectations of a reading of 59.

August’s reading of 58 was revised from 59. Readings over 50 indicate that more builders view housing market conditions as being positive than negative.

Housing Market Index Readings Rise

Components of September’s HMI include readings for home builder views of current market conditions, which maintained August’s reading of 62. The September reading for buyer foot-traffic rose to 47 from 46 in August.

Builder expectations for housing market conditions within the next six months slipped from a reading of 48 in August to 45 for September. Lower expectations for market conditions within the next six months likely take into consideration the coming winter months when weather conditions slow construction and home sales.

Home builder confidence has far outpaced actual home construction on a year-over-year basis; the HMI increased by 45 percent since September 2012. Investors expect a seasonally-adjusted reading of 921,000 housing starts for August on Wednesday. This figure represents a year-over-year increase of 23 percent for housing starts.

Rising mortgage rates affected September’s reading. In addition, David Crowe, chief economist for NAHB also cited consumer credit restrictions, a low inventory of lots available for development and rising labor costs as factors contributing to a plateau in builder confidence.

Fed Decision On Quantitative Easing Tapering Expected

Wednesday’s highly anticipated statement from the Federal Reserve’s Federal Open Market Committee (FOMC) has created a “wait-and-see” mood among home buyers, home builders and investors. The Fed is expected to announce whether or not it will begin tapering its $85 billion monthly purchases of securities.

This program, which is called quantitative easing, was designed to keep long-term interest rates low. Speculation on the Fed’s upcoming decision about reducing its securities purchases has caused mortgage rates to rise since May.

Economists are expecting the Fed to announce moderate tapering of QE to $75 billion in monthly purchases. Reducing or not reducing the fed’s securities purchases has become an elephant in the room to those concerned with mortgage rates; in recent months, the Fed has hinted at its intention to taper QE purchases before year-end.

If the Fed reduces its securities purchases, the demand for securities (bonds) is expected to fall, along with bond prices. When bond prices fall, mortgage rates typically rise. The good news is that once the Fed announces a decision on QE, the guesswork will be done for a while.

Don’t Overlook These Important Factors When Buying A New Home

Don't Overlook These Important Factors When Buying A New HomeMost of the time when buying a property, there are a few obvious factors that you will consider – such as the location, the number of bedrooms, the accessibility to schools or your workplace, the need for repairs and any interior features. However, there are a few things that might not have crossed your mind during your house hunting but are still quite important.

Water Quality

Most home buyers don’t even think about the water quality at the property until they get to the inspection stage. However, if you find out that the home has hard water this will dull your clothes when you wash them and irritate your skin.

Hard water will also create calcium deposits within your showers and faucets and even inside your washing machine and dishwasher. Have the water tested so you know its quality and can look into options for a water purification system.

Cell Phone Reception

When looking at a house, don’t forget to pull out your cell phone and check to make sure that you get good reception. There are a number of “dead zones” throughout the country and you don’t want to buy a house where you can’t make a phone call on your cell.

If you have found your dream house but it has poor phone coverage, there is the option to buy a wireless cell phone signal booster.

Lead, Asbestos And Other Health Risks

When buying homes that are older, make sure that you have the home thoroughly inspected for any health risks such as lead paint or asbestos insulation.

These materials were commonly used several decades ago, before anyone realised how toxic they really are. If you find any toxic substances you can have them removed safely or look for a healthier home.

Slope Of The Land

Take a walk around the property and look at the land around the house. Is it flat, or does the earth dip or slope in one corner of the property? Keep in mind that when it rains, water will flow to the lowest point on the property.

If the house is at the bottom of a slope you might have issues with dampness collecting around the foundations. This can be corrected only with serious landscaping, so it’s much easier to buy a house on higher ground.

These are just a few factors to consider that you might not have thought of when buying a house. For more real estate tips on property, contact your real estate professional.

What’s Ahead For Mortgage Rates This Week – September 16, 2013

What's Ahead For Mortgage Rates This Week - September 16, 2013Last week didn’t feature any housing-related news other than Freddie Mac’s weekly survey of mortgage interest rates.

Reports on consumer credit, job openings and weekly jobless claims suggest that without some relief in the jobs market, Americans may be taking a “wait-and-see” stance toward buying homes.

Consumer Credit Rose By $10.40 Billion In July

The Federal Reserve reported Tuesday that revolving credit fell by an annual rate of 2.60 percent as compared to an annual decrease of 5.20 percent in June. Non-revolving consumer credit such as vehicle and education loans rose at an annual rate of 7.40 percent.

Freddie Mac’s Primary Mortgage Market Survey indicated that mortgage rates were unchanged for both 30-year and 15-year fixed rate mortgage loans. The average rate for a 30-year FRM was 4.57 percent with discount points of 0.80 percent; this was higher than last week’s 0.70 percent.

Average rates for a 15-year fixed rate mortgage were unchanged at 3.57 percent with 0.70 percent in discount points. The average rate for a 5/1 adjustable rate mortgage fell by six basis points from 3.28 to 3.22 percent with discount points unchanged at 0.50 percent.

Mortgage rates are likely to change next week in response to any announcement by the Federal Reserve regarding its plan for reducing the amount of monthly bond purchases in its current quantitative easing program.

Mortgage rates would likely rise if the Fed begins tapering its $85 billion monthly purchase of securities, but if the Fed maintains its current rate of purchases, mortgage rates could remain steady or fall in response to the news.

Retail sales fell short of expectations on Friday. The Department of Commerce reported a seasonally-adjusted growth rate of 0.20 percent in August against an expected reading of 0.50 percent and July’s revised reading of 0.40 percent, which was initially reported at 0.20 percent.

The University of Michigan/Thompson Reuters Consumer Sentiment Index for September fell to its lowest reading since April. The September reading was 76.80 percent as compared to expectations of 81.50 percent and August’s reading of 82.10 percent.

What’s Coming, Will The Fed Taper Its Securities Purchases?

This week’s economic news is highlighted by the Fed’s FOMC statement scheduled on Wednesday after its two-day meeting. The announcement is expected to include an indication of the Fed’s intention concerning its QE program and whether or not monthly securities purchases will be reduced. Fed chairman Ben Bernanke is scheduled to give a press conference after the FOMC statement.

Other scheduled economic news for this week includes the Consumer Price Index and Home Builders Housing Market Index on Tuesday; Wednesday brings reports on Housing Starts and Building Permits in addition to the FOMC statement and press conference. Thursday’s economic reports include Weekly Jobless Claims and the Freddie Mac PMMS along with Existing Home Sales and Leading Indicators.

Social Living – How To Buy A Comfortable Home Guests

Social Living -How To Buy A Comfortable Home For GuestsWhen people are buying a home, one of the things that they sometimes forget to consider is the need to be able to accommodate guests. You likely have out of state relatives or friends who might come and visit you and you will probably want to be able to give them a place to sleep so that they don’t have to pay for a hotel.

You will also probably want to have your parents or your relatives stay over on special occasions such as Christmas. You might even need to host guests for long periods of time, such as if an aging parent needs to move in with you or you need to give a struggling friend some support while they get back on their feet.

Having a home that is well suited to having guests stay will make being a host a lot easier. Having someone sleep on a fold out couch in your living room can be inconvenient for both you and your guest, so what should you look for in a home so that hosting someone will be comfortable?

  • If you have a small home, you might not have room for an extra guest bedroom that is only used occasionally. Instead, choose a home with a multi-purpose room that can be used as a home office, a storage space or a hobby room as well as a guest bedroom.
  • You could use clever storage solutions and a Murphy bed or futon to make the transition into guest bedroom when your friends and relatives arrive. Another option is to choose a home with a finished attic, which can easily be turned into a great small bedroom for guests.
  • Does the house have enough bathrooms for everyone? Waiting for the bathroom while someone else has a shower can get annoying really quickly when there are extra people in the house. A guest bedroom with its own ensuite is ideal.
  • Have at least two or more “chill out” spaces so that everyone doesn’t have to enjoy the same activity. If some of your family members are watching a movie but a couple others want to have a quiet chat or play a board game, make sure that there is another spot where they can sit. It doesn’t have to be huge, just another set of chairs or a sofa somewhere.
  • For the guest room, choose a bedroom that is furthest away from the rest of the main traffic areas in the home. This means that if you wake up earlier or get in later than your guests, you can cook or go about your daily chores without making a lot of noise right outside their door.
  • Make sure that the dining area is big enough to accommodate a larger table to seat your extra guests.

These are just a few things to consider when choosing a home that will make hosting guests easy. For more info about buying a home, contact your trusted real estate professional. 

A Few Reasons Why That Extra Bedroom Might Be Worth It

A Few Reasons Why That Extra Bedroom Might be Worth ItSo you are looking at buying a home, but you are wondering whether or not it is worth it to pay a little extra for a home with one more bedroom.

It’s a tough decision to make, especially when balancing other factors such as location and the other features of the home. However, having one more bedroom than you think you need could end up being a good thing for a number of reasons.

Expanding Family

Perhaps you only planned on having two children, but a third one might come along as an unplanned surprise… will you have enough room for everyone?

One of your children’s friends might have a bad home situation and need a place to crash for a while. One of your elderly parents might need to live with you for a while.

There are many situations when the family living under your roof might expand, (even if it’s just having guests over the weekend) so make sure that you have the space to accommodate.

A Home Office

If you are working from home or have your own business, a private space in the home to work can be worth its weight in gold. It’s really difficult to be productive when you are trying to work at the kitchen table with the rest of the family buzzing around you, so turn your extra bedroom into a home office.

Rental Income

An extra bedroom might be a great source of income, especially if it can be turned into a basement or attic suite. As long as you don’t mind the responsibility of being a landlord, you could rent out the room to a tenant and let their rent help you cover the mortgage payment.

Resale Value

Buying a slightly larger house with one more bedroom means that the home will be easier to sell in the future. This is especially true if all of the other homes in the area have similar amounts of bedrooms.

These are just a few reasons why an extra room can really come in handy. If you want to know more about home buying, you can contact me your trusted real estate professional.