Wednesday, April 16, 2014

The Big Picture on Home Prices

Wednesday, April 09, 2014

Home Buyers Crowd the Early Spring Market

Despite media reports of tight money from lenders, purchase mortgage transactions continue to outnumber refinance transactions. according to Dan Green's latest issue of The Mortgage Reports.

 On February, for the 8th straight month, mortgage lenders closed more loans for U.S. home buyers than for homeowners refinancing an existing mortgage. The market share statistic takes on added weight when we consider that nearly one-third of all home purchases are done with cash.

 According to mortgage origination software firm Ellie Mae, which handles more than 3 million mortgage applications per year, purchase mortgage closings grabbed an additional four percentage points in market share this past February as compared to the month prior, marking the eighth consecutive month during which purchase market share climbed.

Purchase loans as a percentage of all closings have increased 25 percentage points in the past 12 months. There are several reasons why today's purchase loans are gaining market share. The first is that home prices have steadily and slowly climbed nationwide, which has created an urgency among today's U.S. buyers.

 Home values are up more than 10 percent annually in many U.S. cities going back to 2011, with values are up more than twenty percent in select cities including San Francisco, Los Angeles and Las Vegas

Thursday, March 27, 2014

Money Magazine: Buy Now Not Later

We have often suggested that potential home buyers consider rising interest rates when thinking about the true cost of a home. Remember, cost is not determined by price alone but by price and mortgage rate. The longer a buyer waits, the higher the mortgage payment will be if rates continue to increase (as is projected by Fannie Mae, Freddie Mac, the National Association of Realtors and the Mortgage Bankers Association). Money Magazine, in its latest issue, agreed with our analysis as they also warned their readership of the same ramification if they waited to buy a home.

 Here is what they said:
"BE MINDFUL OF RATES. The average interest rate on a 30-year fixed loan is predicted to climb from the current 4.4% to 5.3% by the 2015 spring buying season, according to Freddie Mac. For a $250,000 loan, that means that a borrower who waits would pay $136 more per month and an additional $49,090 in interest over the life of the loan. Will you need a big loan? Better to act soon before rates tick up."

And the monthly increase Money mentioned did not take into consideration that prices are also projected to increase over the next year. Here is what the additional cost would be if prices rise by the 4.5% projected by the latest Home Price Expectation Survey and interest rates go to 5.3%.

Sunday, February 23, 2014

New Surge in Buyer Optimism

Last week, Fannie Mae released their January 2014 National Housing Survey results.  Two categories reported all-time survey highs.
  • 52% of respondents thought it would be easy for them to get a home mortgage today
  • 70% of respondents said they would buy if they were going to move
Doug Duncan, senior vice president and chief economist at Fannie Mae explained what this may mean to the real estate market moving forward:
“A majority of consumers now believe that it is getting easier to get a mortgage. For the first time in the National Housing Survey’s three-and-a-half-year history, the share of respondents who said it is easy to get a mortgage surpassed the 50-percent mark. The gradual upward trend in this indicator during the last few months bodes well for the housing recovery and may be contributing to this month’s increase in consumers’ intention to buy rather than rent their next home. The dip in overall home price expectations, though notable, is consistent with our view of moderating home price gains this year from a robust pace last year, while positive trends in perceptions about the economy and personal finances over the next year support our view of stronger growth in the broader economy.”
With home prices projected to increase in 2014 (albeit at a slower pace than they did in 2013) and with mortgage interest rates projected to increase, it is good news that consumers are becoming more confident in their ability to buy a home if they so desire.

Tuesday, January 14, 2014

Higher Mortgage Rates Predicted -- Perhaps Even Higher Than You've heard

Most experts are calling for an increase in mortgage interest rates in 2014. However, some experts believe the increase will be more dramatic than is being projected. They believe rates will be closer to 6% than 5% by year’s end. The Fed announced last month that they would be pulling back some of their stimulus package which has helped the housing market by keeping long term mortgage rates at historic lows for the last few years.

 Above are the most recent projections of where rates will be at the end of 2014 by the four major agencies. However, we believe that the government is not afraid to shoot right past these levels.

Doug Duncan, chief economist for Fannie Mae, this past summer announced:
 “I don’t think the Fed ultimately would be troubled with a 6.5% mortgage rate.”

 And Frank Nothaft, Freddie Mac VP and chief economist, at virtually the same time explained: "As the economy continues to improve, we expect to see continued upward movement in long-term interest rates… At today’s house prices and income levels, mortgage rates would have to be nearly 7 percent before the U.S. median priced home would be unaffordable to a family making the median income in most parts of the country.”

Only time will tell. However, we feel that rates could easily reach the 5.75-6% range by year’s end.

Tuesday, December 31, 2013

My All Thumbs Year in Review

This has been quite an eventful year in EcoRealty, Check out some of our posts and predictions.

Monday, December 23, 2013

Taper Time

The word tapering in financial terms is increasingly being used to refer to the anticipated reduction of the Federal Reserve's quantitative easing, or bond buying program.

The Fed has announced that they would be pulling back some of their stimulus package which has helped the housing market by keeping long term mortgage rates at historic lows for the last few years.

Some reports will now claim that housing prices will have to drop as interest rates begin to rise. There is no historical evidence of this. Below is a chart showing the last four instances of mortgage rates rising dramatically and what happened to home values at the time.(click on graphic to enlarge)

Wednesday, December 11, 2013

Housing Market Continues to Rebound

The housing market showed a number of positive signs in the midst of seasonal easing, according to the latest results from the Campbell/Inside Mortgage Finance HousingPulse Tracking Survey. While homebuyer traffic continued to decline, the non-distressed market remained relatively strong in October. Time-on-market for non-distressed properties averaged 8.9 weeks in October, based on the three-month moving average, up only slightly compared with the previous month and well below the average of 12.0 weeks in October 2012.

Non-distressed properties in a number of states in the West were on the market a significantly shorter amount of time than the national average, led by California at 5.0 weeks in October, based on the three-month moving average. Non-distressed properties in the Farmbelt, South and Northeast were on the market for at least twice as long as properties in California. The average number of offers on non-distressed properties remained high in October at an average of 2.1, based on the three-month moving average. In October 2012, non-distressed properties received an average of 2.0 offers. 

Home prices for non-distressed properties are holding firm, with a national average of $270,700 in October, based on the three-month moving average, up from$265,500 the previous month and in line with the $271,500 average seen in October 2012.
 “There is a shortage of good inventory,” according to an agent in California. “Homes that are priced correctly and in good condition with good floor plans are selling quickly and often with multiple offers.”

Sunday, December 01, 2013

How Trees Can Boost a Home's Sale Price

In an analysis of 2,608 real-estate transactions over 10 months, researchers found that homes with "street trees," those planted between the sidewalk and street, sold for $7,130 more, on average, than homes without street trees.

A recent Wall Street Journal report goes on to suggest that neighbors can reap the benefits as well. Homeowners who live within 100 feet of street trees enjoy a sale premium of $1,688, on average, even though the trees aren't on their property.

Saturday, November 09, 2013

Why Rates Are Low Again

Mortgage rates are declining towards their all tine lows. This chart helps explain why.

Thursday, November 07, 2013

FHA Mortgages Are Increasingly Popular For Buyers

Nearly 1 in 5 home buyers use FHA financing, though, and there are good reasons why. The FHA has been helping U.S. home buyers since 1934 and, with its myriad of loan programs, there's an FHA loan program for just about anyone.

The Mortgage Report's FHA FAQ will help you understand the in-and-outs of how the FHA mortgage program works.