Real Estate Outlook: Vacation Sales Surge

According to the National Association of Realtors' 2012 Investment and Vacation Home Buyers Survey, there was a surge in sales of both investment in vacation homes in 2011.

NAR Chief Economist Lawrence Yun said investors with cash took advantage of market conditions in 2011. "During the past year investors have been swooping into the market to take advantage of bargain home prices," he said. "Rising rental income easily beat cash sitting in banks as an added inducement. In addition, 41 percent of investment buyers purchased more than one property."

Yun said the shift in investment buyer patterns in 2011 shows the market, for the large part, is able to absorb foreclosures hitting the market.

Increased investor purchases are partly responsible for the large percentage of all-cash purchases seen in the last year. They make up around one-third of all purchases. Forty-nine percent of investors paid cash in 2011.

"Clearly we're looking at investors with financial resources who see real estate as a good investment and who aren't hesitant to use cash," Yun said. Of the buyers who didn't use all cash they paid a hefty average 27 percent downpayment.

As opposed to investment purchases, which were made out of the desire for rental income, vacation homes were driven by lifestyle factors and were purchased by households making an average of $88,000 a year.

What portion of the market are these vacation sales? They accounted for 11 percent of all sales in the market.

Overall mortgage applications increased 4.8 percent from last week, according to the Mortgage Bankers Association (MBA). The refinance share of the market decreased again to 71.2 percent. Just a few months back it was over 80 percent.

"Applications to buy a home picked up last week, and are running more than two percent above the level reported at this time last year. Home purchase applications for conventional loans are now about 10 percent above last year's level," said Michael Fratantoni, MBA's Vice President of Research and Economics. "Applications for government loans increased by more than 10 percent over the week, for both purchase and refinance, likely spurred by borrowers seeking to apply before scheduled increases in FHA mortgage insurance premiums at the beginning of April."


Written by Carla Hill
April 9, 2012

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The Pre-Inspection Inspection

Every good buyer knows that once you are truly interested in a home you need to a have a thorough inspection done. This important step can keep you from making a big mistake or on the opposite hand give you some peace of mind about your purchase.

Did you know there are things you can look for, even as a novice, before an inspection, though, that can clue you into the health of a house? It's true. Here are five things that all home buyers should be on the lookout for when viewing a home.

First, be on the lookout for water damage, leaks, or mold. This isn't a time to be shy. You are looking to buy what could be one of the most expensive purchases of your life. So, look beneath counters, behind shower curtains, and around sinks. Do you see evidence of leaks or of moisture build-up? Are there tiles rotting off walls or dampness under sinks? Don't forget to use your nose. You can smell moisture as soon as you enter some homes.

This goes double for basements. These spaces are notorious for harboring mold, leaks, and moisture. Be sure to brave the spiders and check out even the most unfinished of basements. This is also a great way to inspect joists for rot or termite damage as well as basement walls for damage, which could indicate foundation issues.

Next, make your way to the opposite end of the house and be sure to always view the attic. You can tell a lot about a house by looking at the attic. Is the house properly insulated? If not, what are the average heating and cooling bills? Does wiring look safely installed?

The third item that novices can look at is the age and state of some of the more costly repairs and replacements. Ask about the functionality and age of appliances, water heaters, siding, and paint. Knowing when you'll need to replace these items next can help you at the negotiating table.

Fourth, walk around the outside of a house. This is why it's a good idea to look at housing when it's not too icy or snowy. You want to be able to see the foundation and look for any visible cracks. Another pointer is to look at landscaping and be sure it's not too close to the house, which can cause moisture issues. Large trees can also cause root issue for both plumbing and foundations. You can also diagnose foundation issues by looking at the inside walls and ceilings of the home. Are there large cracks? Is the house shifting and settling?

Finally, take a good hard look at the neighborhood as you stand outside. What state are these houses in? Many will have been built in the same time-frame as your home. How do they look? Are people taking care of their yards? Is the neighborhood noisy? Does it smell good?

These tips are no substitute for a professional inspection of the property, but they can give you some real clues as to whether this home is what you're looking for or willing to get into.


Written by Carla Hill
March 6, 2012, Published by Realty Times

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Tools for New Homeowners

Living in a condo or a rental unit comes with one definite perk. You don't have to make your own repairs!

Now that you have moved into your new home, it's time to put on a new hat, that of "handyman." For the big jobs, like roofing and rewiring, you'll more than likely still rely on a professional. And unless you are truly versed in those specialties, that is what we'd recommend!

But there will be many small jobs that come up which you will be able to fix on your own. Really! Not only will it save you money, but you'll experience a nice swelling of pride that you made whatever it was, work again. To complete those jobs, you'll need tools.

So, what tools will you need as a new homeowner? Here is a list of suggestions from our experts:

1. A toolbox. There is nothing more tiring than having to search for the tool you need. Is the screwdriver in that box under the sink or in the garage? Where do we keep the extra screws? Keep everything together and you'll never waste time hunting for the right tool.

2. Hammer. It seems basic enough, and it is. If for nothing else, you'll need it to hang all your artwork and pictures.

3. Level. From hanging pictures to framing a garage, a level is a must for any handyman.

4. Screw Driver. You'll need more than one! Be sure you have multiple sizes of both phillips-head and flat-blades.

5. Plyers. Have you ever tried to disconnect a fitting on a pipe? You need plyers.

6. Hand Saw. Many handymen prefer power tools, but for those remote spots with no electrical access, you can always count on a hand saw.

7. Tape Measure. How long does that new counter-top need to be? Do we have room for the couch to fit through the front door? Exactly. Use a tape measure.

8. Wire cutters. For what else? To cut wires!

9. Cordless, Reversible Drill and Bits. It's perfect for the ladies that need a little extra oomph to finish a project.

10. Utility Knife. This is great for cutting exact edges.

11. Vice/clamps. Connect a vice to your workbench and use it to stabilize items you are cutting.

This is just a starter kit. There is a tool for practically every need, so over time, your tool box will grow considerably!

Rely on the tool experts at your local home improvement stores, as well. They have been trained to help you find your way. If you are unsure what exact tool you need or how to use it, don't be afraid to ask.

Becoming your own handyman is a learning process, so don't be too hard on yourself. There will be a lot of trial and error. That's half the fun. Enjoy your new home!


Written by Carla Hill
Published by Realty Times

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Benefits of Homeownership

Homeownership can bring with it many blessings. Yet, the idea of caring for and maintaining a home, as well as affording a mortgage can seem daunting, but let's review some of the many reasons that homeownership can be beneficial.

The most obvious benefit is building wealth. The U.S. Department of Housing and Urban Development (HUD) notes that "home equity is the largest single source of household wealth for most Americans."

What is home equity? Home equity is the difference between the home's fair market value and the outstanding balance of all liens on the property. Let's say you have a balance of $100,000 left on your home's mortgage, but the property appraises for $150,000. You now have $50,000 worth of home equity.

And let's not forget about appreciation. While there is no set year-to-year rate that is considered normal, reports indicate that you can expect around a 6.5 percent average value increase in your home each year.

The National Homeownership Strategy cites that “through homeownership, a family ... invests in an asset that can grow in value and ... generate financial security." This is what sets homeowners apart from renters.

Other wealth builders to consider are tax breaks and tax credits, such as the deductibility of property taxes and mortgage interest and the exclusion of capital gains, and the $8,000 first time home buyer and $6,500 home buyer tax credits.

But beyond the numbers and the long term investment benefits, studies have shown that owning a home can actually make you healthier, and make your children happier.

Homeownership allows people to have greater control and inspires responsibility over their living environment. It helps stabilize and strengthen communities. And it helps generate jobs and stimulate the economy (National Homeownership Strategy)

The U.S. Department of Housing and Urban Development (HUD) reports: “Homeowners accumulate wealth as the investment in their homes grows, enjoy better living conditions, are often more involved in their communities, and have children who tend on average to do better in school and are less likely to become involved with crime. Communities benefit from real estate taxes homeowners pay, and from stable neighborhoods homeowners create”

And according to NAR’s Social Benefits of Homeownership and Stable Housing, homeownership brings with it:

• Higher educational performance and better behavior of children

• Lower community crime rates

• Lessened welfare dependency among households

• More household participation in civic affairs

• Better household health

These wonderful benefits only graze the surface of the world of benefits that awaits you in homeownership. Be sure to talk to your real estate agent about what other good things come your way when you buy a home.


Written by Carla Hill
Published by Realty Times

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30-year Fixed-rate Mortgage Matches All-time Record Low

In Freddie Mac's results of its Primary Mortgage Market Survey® the average fixed mortgage rates starting the year at or near their all-time lows. The 30-year fixed averaged 3.91 percent matching its all-time record low amid recent data showing signs of improvement in the housing market and manufacturing industry. This marks the fifth consecutive week the 30-year fixed has averaged below 4.00 percent.

30-year fixed-rate mortgage (FRM) averaged 3.91 percent with an average 0.8 point for the week ending January 5, 2012, down from last week when it averaged 3.95 percent. Last year at this time, the 30-year FRM averaged 4.77 percent.

15-year FRM this week averaged 3.23 percent with an average 0.8 point, down from last week when it averaged 3.24 percent. A year ago at this time, the 15-year FRM averaged 4.13 percent.

5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 2.86 percent this week, with an average 0.7 point, down from last week when it averaged 2.88 percent. A year ago, the 5-year ARM averaged 3.75 percent.

1-year Treasury-indexed ARM averaged 2.80 percent this week with an average 0.6 point, up from last week when it averaged 2.78 percent. At this time last year, the 1-year ARM averaged 3.24 percent.

According to Frank Nothaft, vice president and chief economist, Freddie Mac:

"Fixed mortgage rates started the year a little lower this week just as recent data reports indicate the housing market and manufacturing industry are showing signs of improvement. Pending existing home sales in November jumped 7.3 percent, nearly five times greater than the market consensus forecast, to its strongest pace since April 2010. In addition, construction spending rose 1.2 percent in November, supported by the residential sector which exhibited its fourth consecutive monthly increase. Similarly, manufacturing expanded in December at the fastest pace in six months."


January 6, 2012 Published by Realty Times

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Homeownership Still The American Dream, Fuels Economy

It's billed as the American Dream and yet for some it's been an all-time American nightmare.

Still "the home is central to American life" writes the National Association of Homebuilders in its report titled: Homeownership Works, released earlier this year.

Of course the report aims to show how housing is vital not just to homeowners but to the nation's growth. The publication looks at the contributions that homeownership make to the economy specifically through residential construction, remodeling, rental housing, and various other related aspects of the industry.

The publication shows how homeownership is a vital thread that weaves together a nation. It points to research released earlier this year by Pew Research Center Study, showing that 81% of of adults agree "that buying a home is the best long-term investment a person can make". The sentiment was mirrored by renters (also 81%) who reported they would like to buy a house.

According to the publication, homeownership contributes to household wealth even though many homes have lost significant value in recent years. NAHB reports that "the nation's homeowners have more than $6 trillion in home equity and they still believe in homeownership."

The equity that accumulated in their homes flows into the economy through education, health expenses, home improvements that increase value of the home, and funding retirement.

Some other findings reported in the publication include polling data based on a survey of 2,000 people likely to vote in 2010. The poll was conducted by for NAHB in May by Public Opinion Strategies of Alexandria, Va., and Lake Research Partners of Washington, D.C.

It showed that the majority of voters (71%) oppose proposals to eliminate the mortgage interest deduction. Findings also revealed that 95% of homeowners were glad they purchased a home; and 73% who didn't own a home were hopeful to one day.

Despite the housing crisis, those in this survey viewed retirement savings programs and homeownership as the best investments. And, 80% of those surveyed said they would advise a family member or close friend to buy real estate.

But for a healthy economy to exist, NAHB points out that "rental housing is essential to a well-housed population." The NAHB writes that there are many benefits from the rental housing market, according to the Joint Center for Housing Studies of Harvard University in "America's Rental Housing: Meeting Challenges, Building On Opportunities".

First, moving to rental housing often is less expensive than homeownership. Second, the primary upkeep of the property is the responsibility of the landlord. Third, while landlords often collect first and last months rent, it is still less than a downpayment. However, the majority of people will rent and own at some point in their lives.

Whether you're looking to rent or buy now, most find that their attraction to homeownership creates a sense of belonging and is a an integral part of their lifestyle.

"Americans still see homeownership as a core value and a key building block of being in the middle class and creating strong jobs in their communities. Owning a home isn't just a policy to people. It isn't just a commodity. It is a core value," Celinda Lake, President Lake Research Partners, writes NAHB in its report.


Written by Phoebe Chongchua
December 9, 2011

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Home Inspections

Buying a home is a big decision that includes more than falling in love with the style and decor of a home. A home needs to be in good working order. This is where an home inspector comes in.

A home inspector does a physical inspection of the structure and systems of your prospective home. This means while may love how beautiful the living room’s wood floors are, your inspector can tell if the floor itself will stand for another 20 years. Are there joists that are rotten and need replaced? Is there moisture damage that needs addressed?

What are the basic systems that an inspection covers? You should expect to get a report on the foundation, walls, ceilings, floors, windows, doors, heating and air systems, plumbing (interior), electrical systems and the roof. It’s important that you are present during the inspection so you can be sure that all the systems are checked and that you understand what the problems are and where they’re found.

The inspection itself will set you back several hundred dollars. The amount ranges by region and by inspector. Feel free to ask your real estate agent for suggestions on who to hire. They may have a referral list for you. You can also ask friends and family if they have used someone in the past who they would recommend. If you don’t have anyone to ask, then be sure to check out the American Society of Home Inspectors (ASHI) website, which can help you find inspectors by zip code.

If you are wanting to check for mold or other speciality issues, you’ll most likely need to hire a trained mold specialist to come and inspect the home. This would be a good idea on homes that have mold red flags, such as growth on the walls or floor.

They may be a simple fix, such as repairing a leak and replacing drywall. It could also be a more serious issue, such as black mold, which can wreak havoc on the health of anyone living in the home.

Why is a home inspection really necessary? Your home is a big investment. Most people are on a tight budget and have little room for unexpected expenses. You may have allotted your extra funds towards remodeling the outdated kitchen only to find out that you have $10,000 worth of plumbing issues to fix instead.

Knowing about an issue before closing gives you the upper-hand at the negotiating table. The home in good working order may have been worth $100,000, but with $10,000 of plumbing repairs needed, the price should now be $90,0000.

Just remember that even in new homes, there will be items your home inspector finds need attention. There is no perfect home. Take a moment to reflect on the inspection’s findings and decide if the work that needs done is something you’re willing to take on. You can also ask for the seller to repair these issues before you take possession of the home.

Buying a home can be a wonderful experience. Put a home inspection professional on your side and you’re reducing your risk of costly surprises in the future.


Written by Carla Hill
December 7, 2011

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Mixed News Keeps Low Mortgage Rates Stable

For the past week, mixed economic news that continues to lead the headlines has helped to keep low mortgage rates stable. Financial troubles in Europe has left investors busy each day waiting to see if Greece will default or a rescue plan will be implemented. Here in the U.S., even a negative report that is not considered terribly bad is spreading optimism to the markets making any predictions unreliable.

Although seesawing market movements can be stressful for watchers, Freerateupdate.com's daily survey of wholesale and direct lenders show that the back and forth actions of investors is actually keeping mortgage rates at the same level. Current 30 year fixed mortgage rates are at 3.875%, 15 year fixed mortgage rates are at 3.250% and 5/1 adjustable mortgage rates are at 2.625%. If you have been watching mortgage rates and their fluctuations, then you are aware that mortgage rates have reached historic lows.

Not knowing what direction they will head is probably the best incentive for borrowers to get their mortgage application in motion. With good credit, borrowers can obtain these low mortgage rates with 0.7 to 1% origination fee. Of course, income will need to be verified and other documentation will need to be checked to receive lender approval. Whether you are buying a home or refinancing an existing mortgage, there has never been a better opportunity to receive the lowest mortgage rates available.

FHA has been keeping busy especially with first time home buyers. First time home buyers turn to FHA because no other mortgage loans offer a down payment of 3.5%. Even with credit as low as 500, FHA will accept a down payment of 10%. Then there are the low FHA mortgage rates that are offered and are not based on credit scores. Current FHA 30 year fixed mortgage rates are at 3.750%, 15 year fixed mortgage rates are at 3.500% and FHA 5/1 adjustable mortgage rates are at 2.750%. FHA does have higher closing costs (APR) because of the upfront mortgage insurance premium and other FHA fees. To help with this issue, FHA mortgages allow seller concessions, gifts and housing grants to be part of the mortgage transaction. FHA mortgages have been leading in mortgage applications even when overall mortgage application activity has decreased.

After almost two weeks into the decreased conforming loan limit, low jumbo mortgage rates are doing just fine and have been somewhat stable, along with other mortgage rates. Jumbo 30 year fixed mortgage rates continue to fluctuate and are currently at 4.750%. Jumbo 15 year fixed mortgage rates are at 4.375% and jumbo 5/1 adjustable mortgage rates are at 3.250%. With more properties now falling back into the jumbo mortgage market, it is important that borrowers have these low jumbo mortgage rates still available. Borrowers will need to have excellent credit to obtain these lowest jumbo mortgage rates with 0.7 to 1% origination point. Jumbo mortgages are not government insured so lenders want to be sure that borrowers are well qualified.

Recent volatility has been keeping markets extremely busy for the past week. MBS prices (mortgage backed securities), which move mortgage rates in the opposite direction, have been on another roller coaster. With daily increases and decreases, no major changes have occurred with mortgage rates which have ended up just sitting still. This week, Fed Chief Ben Bernanke told lawmakers that the Feds are prepared to put in additional help to aid the economic recovery. Investors saw some light at the end of the tunnel after the Institute of Supply Management reported an increase in the service sector work force. Jobless claims rose to 401,000 for the week ending October 1st which was right around what was expected while the Labor Department reported that 103,000 jobs were added in September. This was all positive news for investors who have also been watching the Euro zone crisis closely. Friday's downgrade of Spain and Italy only added more concern about Europe's financial problems. Despite what has been going on, stocks have seen some needed increases while, at the same time, mortgage rates have remained low. Coming up this week, third quarter earning reports will begin to trickle in and, again, may cause a lot of volatility.

Published by Realty Times
Written by Ed Ferrara
October 12, 2011

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Mortgage Rates Fall, Housing Opportunities Getting Better

For four weeks in a row, mortgage rates are seeing historic lows. The 30-year fixed average interest rate fell from 4.09% to 4.01% in the end of September. This marks the lowest rate since 1951.

Also, economists call the 15-year fixed mortgage drop to 3.28% the lowest ever for that loan. It appears they could go even lower as the Federal Reserve announced that it will push long-term rates down further.

These historically low mortgage rates aren't necessarily rapidly selling homes. Across the country contract signings have been down. According to USAToday.com, “July's index fell 5.8% in the Northeast, 3.7% in the Midwest and 2.4% in the West. It rose 2.6% in the South.”

The index of sales agreements, tracked by the National Association of Realtors, showed a 1.2% drop down to 88.6 (100 is considered healthy).

Still the opportunities for homeownership keep getting better. Some markets are more affordable than ever; prices have been cut in half in some metro areas.

Of course, getting a loan can be part of the barrier to entry in the housing market. These days, to qualify for a loan a 20% downpayment coupled with a high credit score are required by some lenders.

Now, a new credit score service being introduced in November claims it will give lenders a more accurate picture of a borrower's outstanding debts. The company's website has a countdown to the release of CoreScore (credit report from CoreLogic). It touts the system as a way to “see borrowers as you've never seen them before.”

Some lenders are being extremely strict because they have difficulty determining previous credit behavior. But according to CoreLogic, everything will soon change. The CoreScore credit report is a supplement, not a replacement for the current credit reporting systems.

According to the company, “The supplemental information the CoreScore credit report provides will expand your view of borrower credit profiles and deliver important insight into unseen risk and opportunities.”

Among the information that the CoreScore report will deliver to lenders are the following:

1. Properties owned—with and without debt obligations Mortgage obligations with companies that may not report to traditional credit reporting agencies

2. Property legal filings, such as notices of default

3. Property tax amounts and payment status

4. Estimated market values on all U.S. properties owned

5. Rental applications and evictions

6. Inquiries and charge-offs from pay-day and online lenders

7. Consumer-specific bankruptcies, liens, judgments and child support obligations

With mortgage restrictions tighter than ever and more supplemental information being offered to lenders about borrowers' debts and credit behavior, it's vital for borrowers to understand the most important qualifying factors that influence lenders.

The chief concern is the ability to repay the loan followed closely by the willingness to repay.

Borrowers can place themselves in better standing with lenders by doing two key things: paying off as much debt as possible before applying for a mortgage. This is always good as it lowers the debt-to-income ratio. Secondly, lenders examine borrowers' track record of repayment to determine how they will behave if they are issued a loan. Making sure that credit behavior is monitored and any discrepancies are handled before applying for a loan will help borrowers have a cleaner record and increase the chances of qualifying for a mortgage.

Published by Realty Times
Written by Phoebe Chongchua
October 7, 2011

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30-Year Fixed Mortgage Rate Falls Below 4 Percent

MCLEAN, Va., -- Freddie Mac (OTC: FMCC) today released the results of its Primary Mortgage Market Survey® (PMMS®), showing the average rate for the conventional 30-year fixed mortgage dropping below 4 percent for the first time in history amid increasing global economic concerns. The 15-year fixed, a popular refinancing option, also fell to the lowest level on record for the sixth consecutive week.

30-year fixed-rate mortgage (FRM) averaged 3.94 percent with an average 0.8 point for the week ending October 6, 2011, down from last week when it averaged 4.01 percent. Last year at this time, the 30-year FRM averaged 4.27 percent.

15-year FRM this week averaged 3.26 percent with an average 0.8 point, down from last week when it averaged 3.28 percent. A year ago at this time, the 15-year FRM averaged 3.72 percent.

5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 2.96 percent this week, with an average 0.6 point, down from last week when it also averaged 3.02 percent. A year ago, the 5-year ARM averaged 3.47 percent.

1-year Treasury-indexed ARM averaged 2.95 percent this week with an average 0.5 point, up from last week when it averaged 2.83 percent. At this time last year, the 1-year ARM averaged 3.40 percent.

Frank Nothaft, vice president and chief economist at Freddie Mac, reports, "Average 30-year conventional fixed mortgage rates fell below 4 percent for the first time in history this week following a sharp drop in 10-year Treasuries early in the week as concerns over a global recession grew. Average 15-year fixed rates fell to a record low in the PMMS as well. Interest rates for 1-year ARMs, however, rose, as the Fed began replacing $400 billion of its short-term Treasury securities, which serve as benchmarks for many ARMs. Also, in his testimony to Congress's Joint Economic Committee on Tuesday, Federal Reserve Chairman Bernanke said the recovery is close to 'faltering' and stressed the need for lawmakers to act."

"Meanwhile, the Bureau of Economic Analysis (BEA) reported consumer spending inched up 0.2 percent in August, while personal income fell 0.1 percent, the first decline since October 2009. Also, pending home sales declined for the second consecutive month in August, with some of the decline attributed to Hurricane Irene."

October 7, 2011, Published by Realty Times

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Homeownership's Amazing Benefits

Homeownership brings with it a host of amazing benefits. It's the American Dream for good reason. From health to wealth, it stands out as a great long-term investment, and that's why 67 percent of American households are owner-occupied.

The National Association of Realtors (NAR) knows a little something about how homeownership affects American lives. And that's why they are getting the word out about why you should be a homeowner. According to NAR:

• Homeowners are happier and healthier and enjoy a greater feeling of control over their lives.

• Homeowners pay 80% to 90% of federal income taxes, contributing to federal programs that benefit all Americans.

• Most homeowners enjoy stable housing costs—a fixed rate mortgage payment might not change for 15 or 30 years while rent typically increases 3% a year.

• Children of homeowners … are more likely to participate in organized activities and spend less time in front of the television.

• People who own their own homes … volunteer more and contribute more to their neighborhoods.

• Home owners do not move as frequently as renters, providing more neighborhood stability. In turn, this stability helps reduce crime and supports neighborhood upkeep.

• Children of home owners do better in school, stay in school longer.

Many economists have been touting a jobs recovery as the key to the housing recovery, but perhaps it is the other way around.

Recent data indicates that housing makes up more than 15 percent of our Gross Domestic, and for every home purchased, up to $60,000 is pushed into the economy over time in improvements and furniture.

Additionally, each home sale touches 80 different occupations!

According to the NAR, "America needs jobs. Housing creates jobs. That's one of the many reasons home ownership matters to people, to communities, to America. Strong federal government support of home ownership equals strong support for American jobs. We urge the Obama Administration and the U.S. Congress—as they debate the new federal budget and reform proposals for the nation's mortgage finance system—to continue federal support for home ownership."


Written by Carla Hill
Published by Realty Times

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Fixed-Rate Mortgages Lowest on Record

MCLEAN, Va., -- Freddie Mac (OTC: FMCC) today released the results of its Primary Mortgage Market Survey® (PMMS®), coming on the heels of the Federal Reserve's recent announcements. The conventional 30-year fixed averaged an all-time record low at 4.01 percent; likewise the 15-year fixed averaged an all-time record low at 3.28 percent for the week. Of the five regions surveyed in Freddie Mac's survey, the West region recorded the lowest average rate for the 30-year fixed dipping below 4.00 percent to 3.95 percent.

30-year fixed-rate mortgage (FRM) averaged 4.01 percent with an average 0.7 point for the week ending September 29, 2011, down from last week when it averaged 4.09 percent. Last year at this time, the 30-year FRM averaged 4.32 percent.

15-year FRM this week averaged 3.28 percent with an average 0.7 point, down from last week when it averaged 3.29 percent. A year ago at this time, the 15-year FRM averaged 3.75 percent.

5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 3.02 percent this week, with an average 0.6 point, matching last week when it also averaged 3.02 percent. A year ago, the 5-year ARM averaged 3.52 percent.

1-year Treasury-indexed ARM averaged 2.83 percent this week with an average 0.6 point, up from last week when it averaged 2.82 percent. At this time last year, the 1-year ARM averaged 3.48 percent.

Frank Nothaft, vice president and chief economist at Freddie Mac, reports, "Fixed mortgage rates fell to all-time record lows this week following the Federal Reserve's announcement of its Maturity Extension Program and additional purchases of mortgage-backed securities. Interest rates for ARMs, however, were nearly unchanged as the Federal Reserve plans to sell $400 billion in short-term Treasury securities, which serve as benchmarks for many ARMs."

"Meanwhile, the spring and summer home-buying season gave a boost to a number of house price indexes. The Federal Housing Finance Agency reported that its National index (not seasonally adjusted) rose for the fourth consecutive month in July. Similarly, the S&P/Case-Shiller® 20-City composite index, which has a broader scope of properties, rose 0.9 percent between June and July with 17 of the cities experiencing positive monthly growth. Finally, CoreLogic® reported that its index, excluding distressed sales, increased at a 1.7 percent monthly rate for the same month."

Published by Realty Times
September 30, 2011

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Real Estate Outlook: Jobs Key to Recovery

Jobs are more than a pressing concern in today's economy. Their rebound is inextricably linked to a housing recovery. Even President Obama's proposed jobs legislation includes $15 billions dollars allotted towards the purchase and refurbishment of vacant and foreclosed homes. These homes will then be sold at no profit, or at the price it cost to acquire and fix up.

The Bureau of Labor Statistics shows that while the economy is adding jobs, it's at a rate too slow for a true recovery. The hiring rate in July was at its lowest level since last Fall. The unemployment rate remains near 9.1 percent, though many areas are experiencing much harsher trends.

Fewer jobs means less construction. The U.S. Commerce Department reports that nationwide housing starts declined a full 5.0 percent in August. While the majority of the declines were seen on the multi-family housing side of the equation, it shows builders are holding off for the time being.

The numbers were "consistent with NAHB's forecast for the quarter, and are in keeping with the anemic economic and job growth we are seeing across most of the country," said NAHB Senior Economist Robert Denk. "That said, we continue to anticipate modest gains in new-home production through the end of this year with greater momentum building into 2013, and some pockets of improvement are already evident in about a dozen metros nationwide."

Builder confidence dipped, according to the NAHB, in September, but has held relatively steady for the past 6 months. Unfortunately, it has held steady at a depressed rate.

"The fact that the HMI continues to hover within such a narrow, low range reflects builders' awareness that many consumers are simply unwilling or unable to move forward with a home purchase in today's uncertain economic climate," added NAHB Chief Economist David Crowe. "While some bright spots are beginning to emerge in about a dozen select metro areas, the broader picture remains fairly bleak due to the weak economy and job market."

Builders face some steep challenges and are especially concerned in the West, which posted a 3 point decline in confidence in September. The Midwest was the only region seeing sunnier builder confidence. "Very little has changed in terms of housing market conditions so far this year," said NAHB Chairman Bob Nielsen, a home builder from Reno, Nevada. "Builders continue to confront the same challenges in accessing construction credit, obtaining accurate appraisal values for new homes, and competing against foreclosed properties that they have seen for some time. Beyond this, both builder and consumer confidence took a hit in recent weeks with the market disruptions caused by the S&P downgrade and congressional gridlock on the budget deficit."

The good news is that existing-home sales were up in all regions for the month of August, according to the National Association of REALTORS®. Nationwide existing-home sales rose 7.7 percent. This was despite Hurricane Irene interrupting normal business transactions.

Lawrence Yun, NAR chief economist, said there are some positive market fundamentals. “Some of the improvement in August may result from sales that were delayed in preceding months, but favorable affordability conditions and rising rents are underlying motivations,” he said. “Investors were more active in absorbing foreclosed properties. In additional to bargain hunting, some investors are in the market to hedge against higher inflation.”

Regionally, the biggest increase was seen in the West, up 18.3 percent for the month and 20.6 percent higher than August 2010. The Midwest rose 3.8 percent. The South was up 5.4 percent and the Northeast posted a 2.7 percent gain and is 10.0 percent above August 2010.

Prices continue their downward trend, with median home prices down in all regions compared to August 2010. The West saw the largest decline, falling 13.0 percent from a year ago.

Published on Realty Times
Written by Carla Hill
September 26, 2011

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Stop Renting and Buy While Homes are Most Affordable

If you're currently renting and have dreamed of owning a home, now may be the perfect time. Trulia.com is reporting that during the month of July, buying was cheaper than renting in 74% of the country's 50 largest cities.

However, in 12% of the cities, such as New York, Seattle, and San Francisco, you could rent a place for less than you could buy one. And in the rest of the cities (14%), it was about even, with renting being only slightly less than the cost of buying.

What's tipping the scale to make buying cheaper than renting? Of course, it's the declining home prices and historically low interest rates are also helping to encourage home buying. Recently, interest rates for 30-year and 15-year fixed have been hovering near 4%. Also, the increased demand for rental units is pushing rents up, making now a good time to buy as purchasing a home is cheaper than renting one in most major U.S. cities.

This is making purchasing a home enticing for those who are planning to stay for several years and have the ability to put down a downpayment of about 20 percent.

Where are the hot buying markets? Las Vegas tops the list. The S&P/Case-Shiller home price index, as reported by CNNMoney.com, shows that prices "have plunged more than 59% from their August 2006 peak."

Other markets where buying beats renting include Detroit, Michigan; Mesa, Arizona; and Fresno, California. All of these are places where the cost of a median price condo/townhouse is approximately seven times annual rent.

And as reported by CNNMoney.com, Arlington, Texas; Sacramento, California; Phoenix, Arizona; and Jacksonville, Florida, "all had buy-rent ratios of eight," according to Trulia.

New York is the highest city to rent a home (of the 50 markets surveyed). And to buy in that city would cost about 36 times as much, pushing the purchase price to about a million dollars.

If you're renting now and wondering is this the right time, it really depends on your particular circumstances. Timing the real estate market is never a perfect science. However, the indicators are strong that if you can afford to buy, today's market certainly offers many good opportunities.

Here are a few things to consider to help you make your decision.

The first is the length of time you'll stay in the home. Moves are costly and purchasing a home requires extra cash for commissions and closing costs. So, if you're not sure you can stay for a while, postponing buying might be the right choice. However, if you've been in your rental for a long time and have roots in your city, there are great deals on homes. It might be the right time for you to start paying your own mortgage instead of paying your landlord's mortgage.

How much downpayment? This is a critical concern. With stricter lending requirements, having cash to put down is a make-or-break factor in purchasing a home. Buyers often have to come up with 20% and that can be a big chunk (or even all) of a person's savings. Also, note that the money usually has to be "seasoned". In other words, the downpayment money can't just suddenly appear in your savings account only days before you decide to buy a home. Ask your real estate agent and loan officer for more details.

The cost of owning a home. Part of the thrill of owning a home is the fact that you own it. That means you're responsible for everything inside and out. Of course, planned developments and Homeowner's Associations may cover some of the outside maintenance but then you'll be paying monthly fees. When considering whether to buy or rent, one of the things many first-time buyers neglect to think about is the cost of maintenance. When appliances break; you, the homeowner, will pay to fix them. No more landlord or apartment manager to the rescue. So, if you think things through and weigh the cost of rent versus the cost of buying, you may find the cost and the increased responsibility are well worth it because along with homeownership comes the pride of making your home yours exactly as you like it.


Written by Phoebe Chongchua
August 19, 2011

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