Warmer Weather Brings In The Buyers, Is There Inventory?

April 30, 2014 by

Warmer Weather Brings In The Buyers, Is There Inventory?After three consecutive months of decline, the S&P Case-Shiller 20-City Composite Index remained nearly unchanged in February. Year-over-year home prices rose by 12.90 percent in February as compared to 13.20 percent in January.

20 Percent Below Their 2006 Pre-recession Peak

Analysts note that in spite of recent slowdowns in home prices, the year-over-year rates of home price growth remain close to peak price growth attained in 2006. National home prices remain approximately 20 percent below their 2006 pre-recession peak.

13 cities posted lower rates of price gains in February. The Case-Shiller 10 and 20 city indices showed year-over-year price gains of 13.10 and 12.90 percent respectively. Only five cities posted year-over-year gains in price appreciation.

Las Vegas, Nevada continues to lead home price growth but its year-over-year rate of home price growth slowed from January’s reading of 24.9 percent to February’s reading of 23.10 percent. Washington, D.C. posted its eighth consecutive month of home price gains with a year-over-year reading of 9.10 percent, its highest rate of price increases since May 2006.

Dallas, Texas posted a year-over-year rate of 10.10 percent and a month-to-month increase of 0.20 percent, which continues the city’s record home price growth.

Home Price Gains Expected To Slow In Coming Months

Analysts said that more homes are expected to come on the market and also noted that the rapid increase in home prices for some areas likely sidelined some buyers. As inventories of homes increase, home prices are expected to rise at more modest rates. Job markets continue to experience ups and downs and incomes are relatively flat.

These factors can cause would-be homeowners to take a “wait-and-see” stance. Price increases in other sectors can also impact home prices, as buyers adjust their home purchase plans to what they can afford to spend.

Pending Home Sales Rise In March

The NAR reported that its pending home sales index rose by 3.40 percent in March as compared to a decrease of -0.80 percent for February. The March reading showed the first increase in pending home sales in nine months, and was the highest reading since November.

Warmer weather allowed more buyers shop for homes, but remains 7.90 percent lower than in March 2013. Higher home prices and low inventories of available homes were cited as reasons for the lower reading.

Pending home sales by region showed mixed results, and suggested the impact of severe winter weather on potential home buyers.

Northeast: +1.40 percent

Midwest:    -0.80 percent

South:       +5.60 percent

West:        +5.70 percent

Based on a slow start during the first quarter of 2014, the NAR forecasts 2014 sales of existing homes at 4.9 million as compared to 5.1 million existing homes sold in 2013.

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How You Can Get The Full Selling Price You Want For Your Home

April 17, 2014 by

How You Can Get the Full Selling Price You Want for Your HomeWhen it comes to selling your home and getting the full selling price you want, there are certain tactics and methods you can employ to ensure that this wish becomes a reality.

Avoiding the commonly made mistakes that end up lowering the value of your home and discouraging people from viewing it is ultimately the key in getting top dollar, as well carrying out the showings and sale of your home in a professional manner.

Listen to the professionals, and make sure you employ these real estate sale methods to get your desired number on your home sale.

Listing Tactic: Adding A Buffer

Always dependent on the type of market you find yourself in, a common and successful tactic in getting the price you really want for your home is adding a buffer on the list price.

This means that if you want $500,000 for your home, you should list your home somewhere around $510,000 to $520,000 to allow for some negotiating room. Even if you’d prefer not to negotiate, the majority of buyers will always assume that you have room to come down on the price, and will put in their offers accordingly.

Overpricing: Avoid At All Costs

With that being said, you don’t want to overprice your home too much so as to discourage potential buyers from looking at it, or to put your home outside of a financial bracket. Make sure you speak to your trusted real estate advisor on exactly what the right list price should be to obtain your desired value.

Increase Desire: Have Your Home Staged

In order to get the price you want for your home, you need to make a good impression on the prospective buyers. Having your home professionally staged can dramatically increase the amount of interest you receive on your home, perhaps even creating multiple offers – which is the best situation a home seller can be in!

Appeal To Online Shoppers With Professional Photos

With so much of today’s modern real estate shopping happening online, you want to ensure that your home has a strong online presence with professional photos and a digital floor plan available to prospective buyers. Also make sure that all information online is full and complete, and presents your home in the best light possible.

Always Say Yes To Open Houses And Showings

Especially in a hot market, you want to ensure that you leave your home empty for your real estate agent on weekends so that they can hold it open to the public. This is especially important early on in your list date so that the buyers on the market who are ready to make a move can see your house right away.

You should also apply the same importance to showings, and ensure that each showing request is promptly responded to with an easy “yes.”

If you put these tactics into your home selling plan, you will find that it will be much easier to obtain more interest from buyers. And with more interest, it will be much more likely that you will be able to obtain the price you want for your home.

So don’t underestimate the importance of these factors, and discuss them today with your trusted mortgage professional. 

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Just How Sustainable Is The Micro Housing Trend?

April 16, 2014 by

Just How Sustainable Is the Micro Housing Trend?Something that the Europeans have been doing for decades has finally made its way over the Atlantic Ocean to North America: the trend is called micro housing, and it’s turned into an entirely new way of living.

With micro housing, we’re beginning to do away with oversize condos and even detached homes, learning to live in a more minimalistic manner and curbing our hoarding habits for good.

The affordability of micro housing is making it possible even for young adults and students to purchase their homes in the city centers across North America. But one must ask, is the micro housing trend good for the globe too?

Sustainability Of Micro Condominiums

Being able to pack a higher number of salable units into one building and lowering the prices to widen the market and encourage young buyers to purchase instead of rent is certainly economically beneficial; but is this trend sustainable and beneficial for the planet too?

As it turns out, the cost of building a micro-apartment structure over a regular sized one has a much lighter footprint on our earth. Micro-housing is a sustainable part of urban design because it is made to be a contributing asset to compact cities across North America, requiring less infrastructure cost, fewer resources, and a smaller environmental impact from shipping to construction to ongoing management and maintenance.

Some micro-buildings even have shared areas like kitchens and lounges; this helps to cut back on building costs even further and lessens air pollution from shipping.

Micro Homes: Are They Green?

Though micro detached homes are also on the rise, they have run into problems with bylaws in certain cities across North America. They may just be the way of the future, though, with the real estate prices in many areas growing out of control. These micro homes are similar to the micro condominium units in their petite sizes, however they typically do not have a standard foundation, instead resting on screw piles that are attached to the ground.

These easy-to-assemble micro homes, though perhaps battling with particular municipalities and their bylaws, offer practical housing that is sustainable too. Green features of these micro homes include the additional options of a composting toilet, solar power energy systems, grey water treatment system and a rainwater collection system.

The Lifestyle Of The Micro-Housing Trend

Another factor that should be taken into consideration when looking at the sustainability of the micro-housing trend in the kind of lifestyle it is promoting. Generally situated in the dense city centers, micro housing encourages a lifestyle that is affordable, thereby attracting residents who will take public transit or be within walking distance to work or school, and lessening the need for the daily use of a vehicle.

Perhaps we’re looking a little too enthusiastically at the future, but as it seems, the micro housing trend is bringing with it all kinds of benefits, both economically and sustainably. A lifestyle and housing solution that finally benefits the planet is always accepted among our modern cities across North America, and soon it may just be the reason to purchase instead of rent, allowing us to walk instead of drive.

For more information on the micro housing trend in your area, call your trusted mortgage advisor today!

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The Happenings In A Reverse Mortgage

April 10, 2014 by

The Happenings In A Reverse MortgageWhen you’re looking for ways to supplement your retirement income, there are a number of different options to consider. A reverse mortgage is becoming a more popular and more common way to provide income when your retirement savings don’t leave enough to live on.

But with all the information out there, how do you know what happens in a reverse mortgage and whether it’s a good option for you?

What Is A Reverse Mortgage?

A reverse mortgage essentially reverses the typical actions of a mortgage. Instead of making payments on your home, you receive payments against your home’s equity. The amount you are loaned is dependent on your age, your home’s value, the interest rate and any restrictions placed by state or local laws.

Then when your home ownership changes through sale, death or moves out permanently, the loan comes due and is paid for out of the sale of your home. If you borrow more than the value of your home, you or your heirs will not have to make up the difference.

If your home’s value increases and it sells for more than the total of the loan, you or your heirs receive the difference.

There are a number of requirements that must be met that were implemented in late 2013. These include a the home being your primary residence, reaching a minimum age of 62, an increasing progressive percentage of your home’s value that can be borrowed against based on your current age and limitations on exactly how much value you can borrow against in the first year of the loan.

Let’s Break It Down

As an example, a 62-year-old could borrow 52.6% of their home’s value and receive a disbursement of 60% of that percentage. So if their home had 500,000 in value, they could borrow $263,000 and take out $157,800 the first year. By comparison, a 90-year-old could borrow 66%, so the same home would let them borrow $330,000 and they could take out $198,000 the first year.

Disbursements typically are awarded in three ways: as a lump sum at closing, as periodic payments over the life of the loan or as a line of credit with a checkbook. It is also common for a combination of these three ways be used for disbursement.

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What’s Ahead For Mortgage Rates This Week – April 7, 2014

April 7, 2014 by

What's Ahead For Mortgage Rates This Week - April 7, 2014Last week’s economic news included readings on February construction spending and multiple reports on employment data.

Private sector employment was higher in March, but The Bureau of Labor Statistics reported that Non-Farm Payrolls for March fell short of expectations. According to Freddie Mac, mortgage rates ticked upward.

Employment And Unemployment News

ADP’s payrolls report for March was higher than February’s reading, with 191,000 new private sector jobs added. In February, 178,000 jobs were added. February’s reading originally showed 138,000 new jobs added.

While analysts were confident that private-sector employment was showing signs of stability, the U.S. Bureau of Labor Statistics swamped excess confidence in labor markets Friday with its March reading for Non-Farm Payrolls.

192,000 jobs were added in March against predictions of 200,000 jobs added and February’s reading of 197,000 jobs added.

The news was not all bad as job gains for January and February were revised upward. January’s job gains were revised from 129,000 to 144,000 and February’s reading was revised from 175,000 to 197,000 jobs added. The revised readings represent a total of 37,000 more jobs added.

As data impacted by severe winter weather “shakes out,” it would not be surprising to see a revision to March’s new jobless claims reading as well.

Unemployment Rate Holds Steady, Workforce Numbers Higher

While readings on employment have been up and down in recent months, the national unemployment rate has held relatively steady, with last week’s reading at 6.70 percent. 503,000 workers joined the workforce this increased the labor participation rate for March from 63 percent to 63.20 percent.

Mortgage rates were incrementally higher last week according to Freddie Mac. The average rate for a 30-year fixed rate mortgage increased by one basis point to 4.41 percent; discount points moved from 0.60 percent to 0.70 percent.

The average rate for a 15-year fixed rate mortgage rose by five basis points to 3.47 percent with discount points unchanged at 0.60 percent. 5/1 adjustable rate mortgages had an average rate of 3.12 percent, which was two basis points higher than the previous week. Discount points for 5/1 adjustable rate mortgages were unchanged at 0.50 percent.

This Week’s Economic News Highlights

Job openings for February, FOMC minutes and the University of Michigan consumer sentiment index for March are set for release this week. As usual, Freddie Mac will post results of its latest Primary Mortgage Market Survey and weekly unemployment claims will also be reported.

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S & P Case-Shiller Shows Home Prices Down For Third Consecutive Month

March 27, 2014 by

S & P Case-Shiller Shows Home Prices Down For Third Consecutive MonthHarsh winter weather conditions contributed to home prices falling in January. The S&P Case-Shiller 20-City composite index reported that home prices dropped by 0.10 percent in January, but after seasonal adjustments, home prices increased by 0.80 percent in January as compared to December. 12 of 20 cities posted declines in home prices in January.

There’s no cause for alarm, as year-over-year home prices increased by 13.20 percent as compared to year-over –year readings of 13.40 percent in December and 13.70 percent in November. David Blitzer, chair of the S&P Dow Jones index committee, said “The housing market is showing signs of moving forward with more normal price increases.” Home prices remain about 20 percent below a peak reached in 2006.

Housing Markets Face Challenges

Analysts expect home prices to grow at a slower pace in 2014. Factors impacting home prices include higher mortgage rates that make homes less affordable, new mortgage rules that may affect some homebuyers’ ability to qualify for a mortgage.

A shortage of available homes overshadowed housing market growth in 2013; there just weren’t enough homes available to meet demand in some areas.  The Federal Reserve’s Federal Open Market Committee (FOMC) noted in its statement last week that it was difficult to determine the exact scope of winter weather on recent economic reports.

Regional Markets Show Discrepancies In Recovery

The S & P Case-Shiller 10 and 20-city home price index reports shed light on a “patchwork quilt” housing recovery. While some areas have seen a higher than average rate of year-over-year home price growth, other areas are underperforming.

Here is a sampling of Case-Shiller’s January data throughout the U.S:

Las Vegas, Nevada                             +24.90 percent

San Francisco, California                     +23.10 percent

Chicago, Illinois                                 +10.80 percent

Washington, D.C.                              +9.20 percent

New York, New York                           +6.70 percent

Cleveland, Ohio                                 + 4.00 percent

 The S & P Case Shiller 10 and 20 city home price indices posted year-over-year gains of 13.50 and 13.20 percent respectively.

 FHFA Data Shows Similar Trend

The Federal Housing Finance Agency, which oversees Fannie Mae and Freddie Mac, released its House Price Index (HPI) for January with similar results for homes mortgaged or backed by Fannie Mae and Freddie Mac. The House Price Index indicated that home prices rose by a seasonally-adjusted rate of 0.50 percent from December to January. According to the FHFA HPI, home prices increased by 7.40 percent year-over-year.

January’s HPI was 8.00 percent below the index’s April 2007 high.

The FHFA HPI data is seasonally adjusted and is based on home purchases only.

FHFA month-to-month data for the nine census bureau districts reflects the differences in housing markets throughout the U.S.

FHFA month-to –month home price growth December 2013 to January 2014:

Middle Atlantic division:    + 1.30 percent

New England                        + 1.00 percent

West North Central             + 1.00 percent

Pacific                                    + 0.80 percent

East South Central              + 0.70 percent

Mountain                              + 0.50 percent

South Atlantic                      + 0.30 percent

East North Central              + 0.10 percent

West South Central             –  0.30 percent

Along with warm weather’s arrival is the potential for regional housing markets sidelined over the winter to recover.

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FOMC Statement Shows “Moderate” Economic Growth

March 25, 2014 by

FOMC Statement Shows The Federal Reserve’s Federal Open Market Committee met last week and Janet Yellen held her first press conference as Fed chair. According to the FOMC statement released after the meeting, the Fed cited severe winter weather conditions as a reason for slow economic growth in recent months.

FOMC members will continue to monitor economic conditions and developments as part of any decision to change the Fed’s change monetary policy. Highlights included:

“Moderate” Economic Growth; Asset Purchases Reduced For April

FOMC made the predicted cut to its asset purchase program and reduced April’s purchase of mortgage-backed securities and Treasury bills to $55 billion. Citing moderate economic growth and modest improvement in labor markets, the FOMC expects to continue tapering the Fed’s monthly asset purchases in the coming months.

The FOMC statement indicated that the committee’s policy concerning asset purchases is not set in stone and can be adjusted in response to economic developments

Monthly asset purchases are part of the Fed’s economic stimulus program and are intended to hold down longer-term interest rates such as mortgage rates. If the Fed tapers its asset purchases too quickly, mortgage rates could potentially rise too quickly.

The FOMC statement noted that the U.S. housing market recovery has slowed. It is likely that FOMC members will continue to monitor mortgage rates as part of their “forward guidance” for tapering monthly asset purchases.

FOMC members also voted to maintain the federal funds rate at 0.000 to 0.250 percent. The FOMC said that inflation rates consistently below the committee’s target rate of two percent could pose risks to economic growth, but that the committee will wait and see if inflation moves closer to FOMC’s target reading over the medium term.

Unemployment Benchmark Removed

FOMC members voted to remove the previously established benchmark of 6.50 percent national unemployment rate as a criterion for changes to its stimulus programs. Going forward, the committee will rely on “forward guidance,” which indicates that the FOMC will change monetary policy according to global and domestic economic news and developments.

Chair’s Press Conference

FOMC and Federal Reserve Chair Janet Yellen gave her first press conference after the FOMC meeting statement was released. Ms. Yellen said that the FOMC decision to remove the benchmark unemployment rate was not an indication of change in the Fed’s monetary policy, but said that it would clarify how FOMC would evaluate its monetary policy after the national unemployment rate falls below 6.50 percent.

FOMC expects the national unemployment rate to fall between 6.10 and 6.30 percent by the end of 2014.

Chair Yellen said that weather conditions in January and February interfered with FOMC’s ability to assess the underlying strength of the economy. She added that economic conditions were broadly in line with the committee’s expectations in December 2013. Stronger economic conditions were seen as supporting growth in labor markets.

Chair Yellen said that the committee expected to maintain the federal funds rate at current levels “well past” the time the national unemployment rate falls below 6.50 percent. Inflationary pressures and expectations, labor market conditions and readings on financial developments.

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NAHB Housing Market Index Ticks Upward

March 20, 2014 by

NAHB Housing Market Index Ticks UpwardSpring is almost here, and the National Association of Home Builders Housing Market Index (NAHB HMI) thawed slightly in March.

The current reading of 47 is one point higher than for February, but still indicates pessimism among a majority of builders surveyed. Analysts expected a March reading of 50.

The gauge of builder confidence stayed near its lowest level since May.

March’s NAHB HMI reading remained below the benchmark reading of 50, which indicates that an equal number of builders are positive about housing market conditions as those who are negative.

A reading over 50 indicates that more builders are positive than negative. Last August the NAHB HMI reading reached 58, its highest level since 2005.

Kevin Kelly, NAHB’s chairman said that builder concerns included a lack of land available for development, the lagging effects of severe winter weather and labor shortages.

NAHB HMI Details Show Regional Variances

The NAHB HMI national reading is based on builders’ views of three aspects of housing markets. The March reading of 47 is based on three components. The reading for prospective buyer traffic in new home developments rose by two points to 33.

Builder expectations for present sales of single-family homes rose from 51 to 52. Builder confidence in home sales in coming months fell from a reading of 54 to 53.

Rising mortgage rates and home prices along with inconsistent labor markets influenced builder confidence concerning future home sales.

March Readings For Regional Home Builder Confidence Were Varied:

  • Northeast: March’s reading was five points lower at 29.
  • Midwest: Builder confidence gained three points in March for a reading of 52.
  • West: Builder confidence dropped by five points to a reading of 53.
  • South: March’s reading rose by two points to 48.

In related news, the Department of Commerce reported housing starts for February dropped to 907,000 as compared to January’s reading of 909,000 housing starts and expectations of 908,000 housing starts.

Building permits for February rose by 7.70 percent to their second highest level since the recession for a total of 1.02 million permits. The rise in building permits was attributed to construction plans for condominium complexes and rental units.

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Case-Shiller Index Verifies Home Value Gains Through Q3 2012

November 28, 2012 by

Case-Shiller Index September 2012

The housing market continues to expand.

According to the S&P/Case-Shiller Index, which was released earlier this week, U.S. home prices rose in September for the sixth straight month, climbing 0.3% as compared to the month prior.

On an annual basis, values are higher by 3.0%.

The Case-Shiller Index findings are a composite reading of 20 U.S cities, 17 of which showed home price gains in September. Detroit and Washington D.C. showed slight declines, and New York City showed no change.

Leading the recovery, though, appears to be Phoenix, Arizona. The previously hard-hit city has seen home values gain 20.4% over the last 12 months. Also noteworthy is that Atlanta, Georgia reversed 26 consecutive months of home value declines in September, posting a +0.1% annual growth rate.

Average U.S. home prices have climbed back to mid-2003 levels.

On a month-over-month basis, value change by city varied. San Diego, California and Las Vegas, Nevada both posted gains of 1.4 percent from August, leading the Case-Shiller Index’s 20 tracked cities. Minneapolis, Minnesota and Phoenix showed gains of 1.1 percent.

Los Angeles, California rounded out the Top Five, posting a 1% gain month-over-month.

Despite the index’s strong findings, however, we should remember to temper our expectations. The Case-Shiller Index — like most home value trackers — is wildly flawed. Buyers should follow its gospel with caution.

Here’s why.

First, the Case-Shiller Index tracks values for single-family homes only. As a result, it doesn’t account for multi-unit homes or for condos and co-ops. This is a big deal in cities such as Chicago and New York where high-rise units are common.

Another flaw in the Case-Shiller Index is that it’s 60 days delayed. It’s nearly December yet we’re still reviewing data from September. In housing market terms, September was a different market. Real-time data trumps data from last season. 

That said, the long-term trends as shown by the Case-Shiller Index, are overwhelmingly positive. As a Case-Shiller Index spokesperson remarked, “It is safe to say we are now in the midst of a recovery in the housing market.”

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