31 States Represented In June’s Improving Market Index

June 14, 2012 by

Improving Markets Index June 2012The number of U.S. housing markets showing “measurable and sustained growth” slipped by 20 in June, according to the National Association of Homebuilders.

The Improving Market Index is meant to identify housing markets in which economic growth is occurring as a whole — not just in the real estate space.

By using three separate, independently-collected data series, each tied to local economic conditions, the Improving Market Index takes a broader view of the housing market than other housing market indicators — the Case-Shiller Index, for example — which are often singularly tied to housing contracts.

The Improving Market Index tracks three distinct data series :

  1. From the Bureau of Labor Statistics : Employment statistics
  2. From Freddie Mac : Home price growth
  3. From the Census Bureau : Single-family housing growth

A given metropolitan area is categorized as “improving” by the National Association of Homebuilders if all three data series indicate growth at least six months after that area’s most recent economic trough.

In other words, the Improving Market Index looks past head-fakes of recovery, instead in search of long-term, sustainable growth.

This is one reason why its list of included cities is so fluid. It’s difficult for a metropolitan area to meet the Improving Market Index’s inclusion requirements month-after-month in a post-recession economy.

The Improving Market Index dropped to 80 in June, says the home builder trade group.

The list includes 28 new entrants, with forty-eight markets removed as compared to May. 31 states are represented nationwide.

For home buyers , the Improving Markets Index is a non-actionable report but it does do a good job of highlighting the local nature of real estate. For example, Columbus, Indiana was added as an Improving Market in June. Yet, Indianapolis, Indiana — located just 46 miles away — was downgraded from the same list. 

Economies vary by locale.

The complete Improving Markets Index is available for download at the NAHB website. For a better gauge of what’s happening on the local level , though, talk to a local real estate agent.

Filed Under: Housing Analysis Tagged With: , ,

Before Moving, Check Your New Cost Of Living Estimates

June 13, 2012 by

Cost of Living adjustments in a new townWith home values slow to rise and mortgage rates at all-time lows, there’s never been a more affordable time to own a home.

However, there is more to the cost of living than just a mortgage payment. There’s the cost of groceries, gasoline and routine medical care, too.

Not surprisingly, where we live affects our costs.

Big cities are often more expensive in which to live, for example, and local tax laws influence daily costs, too. 

For home buyers moving across state borders, therefore — or even for those moving long distances intra-state — it’s important to know the relative costs in your new hometown as compared to your current one. Your household cash flow depends on it. You can’t know your budget for a home if you don’t know what life in a new town will cost you.

Enter Bankrate.com’s Cost of Living Comparison Calculator.

In comparing the costs of 60 mundane, everyday items, the Cost of Living Comparison calculator can show you how common costs in your current home town compare to costs in your soon-to-be new home town.

The calculator asks for just three inputs — (1) In what city do you live now, (2) To what city are you moving, and (3) What is your current salary — then uses that information to produce a detailed cost comparison.

Some of the Cost of Living items compared include :

  • Ground beef costs
  • Veterinary services costs
  • Dozen egg costs
  • Doctor visit costs
  • Hair care costs

The calculator also includes local mortgage rate differences to help plan for housing, and accounts for median home prices, too.

The online Cost of Living calculator is based on data from the ACCRA. On the ACCRA website, a similar cost comparison report sells for $5. At Bankrate.com, you can get the data for free.

Filed Under: Personal Finance Tagged With: , ,

Mortgage Payments Fall To All-Time Lows

June 12, 2012 by

Mortgage payments

It’s a money-saving time to be a home buyer. Historically, mortgage rates of all types — conventional, FHA, VA and USDA — have never been lower and low mortgage rates make for low monthly payments. 

According to Freddie Mac’s weekly mortgage rate survey, the average 30-year fixed rate mortgage fell to 3.67% nationwide last week for borrowers willing to pay 0.7 discount points at closing, plus a full set of closing costs. 0.7 discount points is a one-time closing cost equal to 0.7 percent of your loan size, or $700 per $100,000 borrowed.

Today’s mortgage rates are a bargain as compared to just 1 year ago.

In early-June 2011, the average 30-year fixed rate mortgage nationwide was higher by 88 basis points, or 0.88%. If you are among the many U.S. homeowners who bought or refinanced a home around that time, refinancing to today’s mortgage rates could save you 10% or more on your payment.  

Home buyers have measurably more buying power, too.

Here is how mortgage payments on a typical 30-year fixed rate mortgage have changed in 12 months :

  • June 2011 : $509.66 principal + interest per $100,000 borrowed
  • June 2012 : $458.59 principal + interest per $100,000 borrowed

Setting the math to a real-life example, a homeowner whose $350,000, 30-year fixed rate mortgage dates to last June would recognize monthly savings of at least $179 per month just by refinancing into a new 30-year fixed rate mortgage at today’s current levels. That’s more than $2,145 in payment savings per year.

Even after accounting for the required loan discount points and closing costs, the “break-even point” on a refinance like that can come quickly.

Mortgage rates have been dropping but there’s no promise they’ll fall forever. Once rates reverse higher, they’re expected to rise sharply. Therefore, if you’re planning to buy a home or refinance one , consider locking in a mortgage rate while mortgage rates are low.

The market looks good for that today.

Filed Under: Mortgage Rates Tagged With: , ,

How To Keep A Clean Refrigerator

June 11, 2012 by

Clean refrigeratorDo you clean your refrigerator regularly, or only after you’ve run out of space? If your answer is the latter, your refrigerator may be harboring dangerous bacteria that can make you, your family, and your house guests ill.

Refrigerators should be cleaned monthly, inside and out, ideally. The process involves removing all foods, cleaning all shelves, and wiping down drawers. Spoiled food is removed and old containers reclaimed.

The process takes 20 minutes. Here’s how to do it.

First, prepare your cleaning stations, including filling a sink with soapy water, and having drying towels handy. Complete this step before you start to remove food from the refrigerator. This limits the amount of time that food has available to reach room temperature.

Next, remove all food from the appliance. Throw out old food past its expiration, and leftovers which have been in containers for more than a few days. Check dairy products for expiration dates — especially cheeses and creams. Toss fruits and vegetables that have spoiled. Wipe down condiment jars and bottles with a damp towel.

Next, with the refrigerator empty, remove all shelves and drawers and wash them in the water-filled sink. Scrub to remove any caked-on foods and spills. Rinse off the soapy water and dry the part on your drying towels.

Then, while the shelves and drawers are drying, using a mixture of baking soda and water, wipe down the interior surfaces of your appliance. The mixture should be roughly 2 tablespoons of baking soda for every 1 gallon of water. Wipe the mixture off with a clean towel.

Lastly, move the shelves and drawers back into the refrigerator and replace all of the food that’s “good”.

Refrigerators can be a dirty place. We rarely wash our hands before handling food in a refrigerator and that can contribute to a bacteria-heavy environment. A good cleaning, though, can keep our foods — and our home — healthy.

Clean your refrigerator regularly.

Filed Under: Around The Home Tagged With: , ,

Phoenix Leads Annual Home Price Gains, According To Case-Shiller Index

June 8, 2012 by

Case-Shiller Index

Standard & Poors released its March 2012 Case-Shiller Index last week. The index is meant to measure changes in home prices from month-to-month, and from year-to-year, in select U.S. cities.

According to the report, home values rose in 12 of the Case-Shiller Index’s 20 tracked markets, and one market remained unchanged.

Of the Case-Shiller markets, Phoenix, Arizona posted the largest one-year gain, climbing 6.1 percent. Atlanta, Georgia posted the largest one-year loss. Values falling more than seventeen percent there year-over-year.

Overall, the Case-Shiller Index was relatively unchanged in March as compared to the month prior, but down nearly 3 percent on an annual basis. Nationwide, says Standard & Poor’s, home values are back to the levels of late-2002.

Don’t be overly concerned, however. Though widely-cited, the Case-Shiller Index is a flawed and misleading metric. It’s methodology almost guarantees it.

The first flaw in the Case-Shiller Index is its limited geography. Despite there being more than 3,100 municipalities nationwide, the Case-Shiller Index tracks just 20 of them. They’re not the 20 largest ones, either. Houston, Philadelphia, San Antonio, San Jose are specifically excluded from the Case-Shiller Index and each is among the Top 10 Most Populous Cities in the United States.

Minneapolis (#48) and Tampa (#55), by contrast, are included.

The Case-Shiller Index’s second flaw is that only tracks the sales of single-family, detached homes. Sales of condominiums and multi-unit homes carry no weight in the index whatsoever — even in cities such as Chicago and New York in which condos can account for a large percentage of the overall real estate market.

And, lastly, when the Case-Shiller Index is published, it’s published on a two-month delay. Buyers and sellers don’t need housing data from two months ago — they need data from today. The Case-Shiller Index tells us what housing was, in other words. It doesn’t tell us how housing is. 

Buyers and sellers need real-time, actionable information. You can’t get that from the flawed Case-Shiller Index. For more accurate, relevant real estate data, talk to your real estate professional instead. 

Filed Under: Housing Analysis Tagged With: , ,

FHA To Change Its Mortgage Insurance Premium Schedule Monday, June 11, 2012

June 7, 2012 by

New FHA MIPBeginning Monday, June 11, the FHA is changing its mortgage insurance premium schedule for the second time this year.

Some FHA mortgage applicants will pay lower mortgage insurance premiums going forward. Others will pay more. The new premiums apply to all FHA mortgages, both purchase and refinance.

The MIP update will be the 5th time in four years that the FHA has changed its mortgage insurance premium schedule.

FHA-backed homeowners who have not refinanced within the last 3 years will benefit from the new MIP. This is because, beginning with all FHA Case Numbers assigned on, or after, June 11, 2012, homeowners whose current FHA mortgage pre-dates June 1, 2009 will be entitled to dramatically reduced annual mortgage insurance premiums and almost zero upfront MIP via the FHA Streamline Refinance program.

Whereas new FHA applicants may pay up to 1.25% per year for annual mortgage insurance plus 175 basis points at closing for upfront MIP, the “grandfathered” FHA applicants will pay just 0.55% per year for mortgage insurance and 1 basis point at closing.

Assuming an FHA loan size of $200,000, the savings are large :

  • New FHA applicant : $208 per month for annual MIP; $3,500 due at closing for upfront MIP.
  • Pre-June 2009 FHA applicant : $92 per month for annual MIP; $20 due at closing for upfront MIP.

The premiums apply to all FHA mortgage applicants, regardless of loan product or term. For example, 15-year FHA mortgage will follow the same mortgage insurance premium schedule as a 30-year FHA mortgages.

Another class of FHA-backed homeowners won’t get so lucky. For homeowners in high-cost areas whose mortgages are between $625,500 and the local FHA loan limit, annual mortgage insurance premiums will be raised by 0.25% for all 15-year and 30-year loan terms.

For loan sizes above $625,500, the new annual FHA mortgage insurance premiums are as follows :

  • Loan term of 15 years or fewer, loan-to-value of 90% or less : 0.35% per year
  • Loan term of 15 years or fewer, loan-to-value greater than 90% : 0.60% per year
  • Loan term of more than 15 years, loan-to-value of 95% or less : 1.45% per year
  • Loan term of more than 15 years, loan-to-value greater than 95% : 1.50% per year

FHA-backed homeowners with loan terms of 15 years or fewer, and with loan-to-values below 78%, are exempt from annual MIP. Upfront MIP payments, however, remain mandatory.

The FHA continues to tinker with its mortgage insurance premiums, attempting to strike a balance between affordability for its homeowners and solvency for its program. Experts expect the FHA to change its premiums again. And, when it does, it’s likely that premiums will rise.

If your FHA mortgage will be for more than $625,000, and you plan to make a purchase or refinance application soon, it’s best to get your FHA Case Number prior to Monday, June 11. Otherwise, you’ll pay higher annual MIP.

Against a $700,000 mortgage, the extra 0.25% in MIP per year will add $1,750 to your annual housing payment.

Filed Under: Mortgage Guidelines Tagged With: , ,

Simple Real Estate Definitions : Home Inspection

June 6, 2012 by

Get a home inspectionWhen you preview homes as a home buyer, you can get a good feel for the home’s visible traits — its finishes, its room counts, and its landscaping, for example. What you can’t get a feel for, though, is the home’s “bones”.

It’s for this reason that real estate professionals recommend that you have a property formally inspected immediately after going into contract for it.

A home inspection is a thorough, top-to-bottom check-up of a property’s structure and systems. It is not the same as a home appraisal, which is a valuation of the property. By contrast, home inspections are an objective report on a home’s physical condition.

Home inspections are performed by home inspectors who will typically do the following :

  • Check heating and cooling systems for leaks and efficiency
  • Check electrical systems for safety and soundness of design
  • Check plumbing systems for venting, distribution, and drainage

In addition, a home inspector will review a home’s roofing system; its doors, windows and garages; plus, any attic spaces and basements, where appropriate.

A home inspection may also uncover out-of-code electrical work that municipalities required to be fixed by law.

Meanwhile, it’s not just home buyers who can order inspections. Sellers can order them, too.

One recommended tactic is for a home seller to have the home inspected prior to listing for sale so that all required repairs can be made in advance of showing the home. This can speed up and simplify the sales process, and may help your home sell at a higher price. Buyers often prefer homes in “move-in” ready condition.

A thorough home inspection can take up to 6 hours to complete, depending on the size of the home.

Filed Under: Real Estate Definitions Tagged With: , ,

30-Year Fixed Rate Mortgage Rates Fall To 3.78% Nationwide

May 25, 2012 by

Freddie Mac mortgage rates

For the fifth consecutive week, conforming 30-year fixed rate mortgage rates have dropped to new all-time lows.

According to this week’s Primary Mortgage Market Survey from Freddie Mac, “prime” mortgage applicants willing to pay 0.8 discount points plus closing costs can secure a mortgage rate of 3.78%, on average.

This is a small improvement in rate over last week when the average 30-year fixed rate mortgage rate was 3.79% with 0.7 discount points.

1 discount point is equal to 1 percent of your loan size.

Like everything in real estate, though, mortgage rates are local. Freddie Mac reports that the mortgage rates available to consumers varied by region.

  • Northeast Region : 3.78% with 0.7 discount points 
  • West Region : 3.74% with 0.9 discount points
  • Southeast Region : 3.79% with 0.7 discount points
  • North Central Region : 3.83% with 0.6 discount points
  • Southwest Region : 3.81% with 0.7 discount points

North Central Region residents currently pay the lowest fees and get the highest rates. For residents of the West, it’s the opposite. Everywhere, however,mortgage rates are down. As compared to one year ago, today’s monthly carrying cost for a conforming, 30-year fixed rate mortgage is lower by $50 per $100,000 mortgaged, or $600 per year.

A $300,000 mortgage would save $1,800 annually.

Mortgage rates have been dropping because Wall Street remains concerned for the futures of Greece, Spain, Italy and the European Union. Several European nations are at-risk for a sovereign debt default and Greece remains a threat to leave the EU. To protect against potential loss, investors have been moving money away from risky holdings toward safer ones — a class that includes U.S. mortgage-backed bonds.

As demand for the bonds rise, prices do, too. This leads mortgage rates lower and so long as economic uncertainty remains, mortgage rates are expected to stay low.

Low mortgage rates make this a good time to buy or refinance a home. Talk to your loan officer to review your mortgage options.

Filed Under: Mortgage Rates Tagged With: , ,

New Home Sales Rise For 7th Month Out Of 8

May 24, 2012 by

New Home Supply (2011-2012)The April New Home Sales report suggests that the market for newly-built homes is as strong as the market for existing ones. 

According to the U.S. Census Bureau, the number of new homes sold rose 3.3 percent in April to a seasonally-adjusted, annualized 343,000 units sold — its second-highest reading since April 2010.

April 2010 marked the last month of that year’s federal home buyer tax credit program.

April’s New Home Sales data also marks the 7th of eight consecutive months during which the number of new homes sold climbed nationwide, a streak unequaled in recent history. During this period, the supply of new homes for sale has dropped 13%. 

The complete new home inventory is down to 146,000 homes nationwide.

At the current pace of sales, home buyers across the county would exhaust the complete supply of newly-built homes in 5.1 months.

This, too, is a significant figure.

When home supplies fall below 6 months of inventory, it’s widely believed to indicate a “seller’s market” and there hasn’t been more than 6 months of a new home supply since October 2011. This has placed upward pressure on new home prices and helps to explain why the average home sale price is up 9% from just 6 months ago.

Homes are selling, and they’re rising in price — a trend that today’s buyers should expect to continue through the summer and fall months.

Record-low mortgage rates have moved home affordability to an all-time high with home builders now reporting the highest levels of buyer foot traffic at any time since 2007. As builder confidence grows, buyers can expect to find fewer “great deals” — especially as demand for homes outpaces supply. 

If you’re a home buyer in search of new construction, therefore, the best new construction “deals” of 2012 may be the ones you find today. By 2013, the deals may be gone.

Filed Under: Housing Analysis Tagged With: , ,

Existing Home Sales Climb 3.4 Percent In April

May 23, 2012 by

Existing Home Supply

Low mortgage rates are helping to make homes more affordable. It appears home buyers have taken notice.

According to the National Association of REALTORS®, Existing Home Sales rose 3.4% in April from the month prior, registering 4.62 million homes sold on a seasonally-adjusted, annualized basis.

An “existing home” is a home that’s been previously occupied. April’s sales volume represents a 10 percent jump from April of last year.

For buyers and sellers , the April Existing Home Sales report supports the notion that the housing market may be improving; that the “bottom” occurred sometime in late-2011. Home values have been rising in many U.S. markets and home builders now report the highest levels of foot traffic through models since 2007.

Demand for U.S. housing is growing.

It also helps that home affordability is at an all-time high. Not in recorded history have this many homes for sale been affordable to buyers earning a moderate household income, on a percentage basis. Additionally, there is now a larger stock of homes from which buyers can choose.  

In April, the number of homes for sale nationwide jumped 9.5 percent to 2.54 million — the largest home resale inventory of the year.

At the current pace of sales, it would take 6.6 months for the complete home inventory to sell. Analysts consider a 6.0-month supply to be a market in balance. Anything less than a 6-month supply suggests a “buyer’s market”.

Home values peaked nationwide in April 2007. Since then, it’s been an uneven recovery. Some markets came back quickly, while others did not. On a neighborhood-by-neighborhood basis, even, there’s signifcant variance in how home values have fared.

In other words, although the April Existing Home Sales report indicates housing strength nationally, it’s the local data that matters most to today’s buyers and sellers. To get real-time real estate data for a particular street or area, talk with a local real estate agent.

Filed Under: Housing Analysis Tagged With: , ,