What’s Ahead For Mortgage Rates This Week – December 31st, 2018

Last week’s economic reports included readings from Case-Shiller Housing Market Indices, National Association of Realtors® on pending home sales and weekly readings on mortgage rates and new jobless claims.  

The Commerce Department’s reading on sales of new homes was delayed due to the federal government’s shutdown.

Case-Shiller: Home Price Growth Lowest in Two Years

Home price growth was nearly nil with October’s month-to-month reading of 0.40 percent; The Case-Shiller 20-City Home Price Index showed a year-over-year home price growth rate of 5.50 percent, which matched September’s year-over-year reading. Las Vegas, Nevada led home price growth in the 20-city index with a year-over-year increase of 12,80 percent; San Francisco, California had home price growth of 7,90 percent and Phoenix, Arizona home prices grew by 7.70 percent year-over-year in October.

While San Francisco, California, Seattle, Washington and Portland, Oregon dominated the top three spots in the 20-City Home Price Index in recent years, the latest home price growth rates indicate that the West Coast may be easing off on its rapid home price gains. High-cost metro areas risk reaching a tipping point when there are few properties available with very high prices and buyers competing.

,Affordability and slim choice of available homes can cause would-be buyers to sideline themselves while they await more options and lower prices. Rising mortgage rates caused concern among buyers concerned with affordability and qualifying for mortgage loans under strict lender requirements.

Pending Home Sales Improve, But Remain in Negative Territory

Future home sales slipped in November, but less so than they did in October. Pending sales registered in negative territory with a reading of -0.70 percent in November as compared to October’s reading of -2.60 percent.

Analysts and real estate pros view pending sales as an indication of future completed sales and mortgage activity; falling numbers for pending home sales suggest slowing home sales that could impact housing markets. Pending sales are considered sales for which purchase contracts have been signed, but that have not closed.

Mortgage Rates, New Jobless Claims

Freddie Mac reported lower averaged fixed mortgage rates with the rate for a 30-year fixed rate mortgage lower by seven basis points at 4.55 percent. The average rate for a 15-year fixed rate mortgage fell by six basis points to 4.01 percent and the average rate for a 5/1 adjustable rate mortgage rose two basis points to 4.00 percent. Falling mortgage rates could induce discouraged home buyers to look for homes again.

First-time jobless claims dropped by 1000 claims to 216,000 new claims filed. Analysts predicted a reading of 217,000 mew claims filed, which was unchanged from the prior week’s reading.

What‘s Ahead

This week’s scheduled economic reports include readings on construction spending, non-farm payrolls and the national unemployment rate. Weekly reports on mortgage rates and first-time unemployment claims are also scheduled. Please note that some scheduled readings could be delayed due to the federal government shut-down.

How Tech Can Change the Real Estate Process

Virtual reality, artificial intelligence and drone video are just a few of the ways that technology is changing the real estate industry. If you are in the market for a property, understanding these new processes can help you in many ways.

Using Artificial Intelligence

Doing business with an AI-infused process helps you more quickly identify properties that meet your standards. AI also reduces human error in the closing process. Agents using AI can get you more information about properties more quickly, and they can also cut the fat out of the close, possibly saving you money.

Using Virtual Reality

Taking a virtual reality tour of a property can save you a lot of gas, time and effort. You no longer have to physically be at a location to understand its potential – you can see everything that you need to see online. Of course you can follow up in person, but you save huge amounts of time by visiting only the properties that have impressed you online.

Organizing Big Data

Buyers and sellers have access to more information than ever – information that was once only available to full time professionals in the industry. Dealing with it can be quite overwhelming, but you must in order to be a sophisticated investor. In many cases, your agent serves as your information filter, keeping you from becoming distracted by false or misleading information.

Remote Transactions

A growing number of real estate transactions are being done without ever meeting the other party involved. The entire process can be conducted online from search to close, if need be. Buyers and sellers can save a great deal of money through reduced overhead with remote transactions. Biometrics help to maintain the security of the transaction.

The technologies above are just a few of the new things that are changing the real estate process for the better. Keep your ear to the street, because the landscape is always changing.

As soon as you are interested in looking for a new home, be sure to contact your trusted mortgage professional to secure your financing and get your pre-approval ready.

4 Reasons Why Home Ownership Is Better Than Renting

Are you trying to decide if you should rent or buy? There are many reasons why home ownership is better than renting. Here are just a few to consider when you’re making your decision.

1. Stability For Your Family

When you own your home, the life of your family will be more stable. If you have children, this is a an even more valuable benefit. Your kids will be able to settle down into the routine of school and extracurricular activities. They’ll be able to make lifelong friends in the neighborhood. You and your spouse will be able to feel a strong sense of community and belonging.

2. Personalization

Owning a home is better than renting because you can personalize and customize your living environment. In many rentals, you can’t even paint the walls if you want to.

When you own, you not only can paint walls whatever color you want; you can knock them down if you like! You spend so much time at home, being able to make stamp your personality on it is a huge benefit!

3. Peace And Quiet

When compared to renting an apartment, there is a lot more peace and quiet in your own home. In an apartment, walls are shared. Often, there isn’t a lot of insulation inside the walls, either. It’s likely you’ll be able to hear your neighbors, their kids or their barking dogs. When you own your home, you’ll be able to enjoy the peace and quiet you deserve.

4. Outdoor Property

When you own your home, you may have access to outdoor space in addition to your house. That property is yours to do as you wish. You could make an outdoor living area, plant a garden, install a pool or erect a badminton set. The outdoor property around your house certainly adds to the satisfaction of owning your home.

It’s likely that these four benefits will give you some reasons to pursue home ownership. Chances are you’ll never want to go back to renting again!

When you’re ready to begin the search for your next home, contact a trusted mortgage professional in your area to get your financing pre-approved!

FOMC Raises Key Rate, Forecasts 2 Rate Hikes in 2019

During its post-meeting statement, the Federal Open Market Committee of the Federal Reserve announced that its target range for the Fed’s key interest rate would increase one quarter percent to 2.25 to 2.50 percent. While this rate hike was not expected by the Executive branch, it met analyst expectations.

FOMC said in its customary post-meeting statement that members expect to make two interest rate hikes in 2019 as compared to three rate hikes in 2018 and the Committee’s original forecast of three rate hikes in 2019. Given current economic conditions, the Fed forecasted only one rate hike for 2020.

Hawks And Doves: Federal Reserve Leaders Differ On Interest Rate Projections

Six FOMC members indicated support for three rate hikes in 2019 and the FOMC statement cited a need for future interest rate hikes while some economists expected that no mention of potential rate hikes would be included in the statement. Fed Chair Jerome Powell said, “Policy at this point does not need to be accommodative. It can move to neutral.”

FOMC’s statement cited “cross currents” impacting the economy, but expects “solid growth next year, declining unemployment a healthy economy.” The Fed specifically listed strengths in labor markets, household spending and a healthy economy influenced the committee’s decision to raise the Fed’s benchmark interest rate range.

Recent volatility in global affairs and the economy prompted FOMC to say that they would be reviewing ongoing global economic and financial developments and assess their implications for the global economic outlook.

Fed Chair Jerome Powell: “Fed Is About To Embark On A Delicate Balancing Act“

Chairman Powell said that current economic conditions have helped the Fed meet its dual mandate of maintaining maximum employment and stable economic growth, for which the Fed has set a benchmark of two percent annual growth for inflation. Current inflation is lower than expected and unemployment is near record lows. The Fed faces balancing interest rate increases with closely monitoring economic “cross currents”.

Chairman Powell said the Fed expects the median rate of economic growth to slow to 2.30 percent in 2019 as compared to 2018’s rate of 3.00 percent. The National Unemployment rate is expected to fall from its current rate of 3.70 percent to 3.50 percent by the end of 2019. Mr. Powell said that no course of action is predetermined and that Fed leaders will monitor economic and global developments on an ongoing basis.

 

What’s Ahead For Mortgage Rates This Week – December 24th, 2018

Last week’s economic news included readings from the National Association of Home Builders, Commerce Department readings on housing starts and National Association of Realtors® report on sales of previously-owned homes. Weekly reports on mortgage rates and first-time jobless claims were also released.

NAHB: Home Builders Lose Confidence as Housing Crunch Continues

Homebuilder confidence fell to a 36 month low in December as homebuilder concerns over rising home prices, high mortgage rates and decreasing inventories of available homes sidelined home buyers. The NAHB Housing Market Index fell four points to 56.

Components of the Housing Market Index reading also fell as builder confidence in current market conditions fell six points to an index reading of 61; builder confidence in new home sales over the next six months fell by four points to a reading of 61. Builder confidence in buyer traffic in new home developments dipped two points to 43.

While any reading over 50 is considered positive, buyer traffic readings under 50 are not unusual.

Analysts and real estate pros often consider the Home Builders Housing Market Index as an indicator of future new home construction and sales. Rising home prices and mortgage rates were cited as reasons contributing to the drop in home builder confidence.

Existing Home Sales, Housing Starts and Building Permits Issued Rise in November

Sales of pre-owned homes rose in November with 5.32 million sales reported on an annual seasonally adjusted basis. Analysts expected a reading of 5.17 million sales based on October’s sales pace of 5.22 million sales.

Three out of four regions reported gains in sales of pre-owned homes. The Northeast reported a gain of 7.20 percent; the Midwest reported a year-over-year gain of 5.50 percent and sales of pre-owned homes were 2.50 percent higher in the South. The West lost traction in existing home sales with a negative reading of -6.30 percent. Known for high home prices, it may be that home prices have peaked in the West.

The Commerce Department reported housing starts at the rate of 1.25 million in November; analysts predicted a rate of 1.230 million starts based on October’s reading of 1.217 million starts. November building permits rose to 1.328 million permits issued as compared to a reading of 1.265 million permits issued in October.

Analysts said that more apartment homes were being built; this trend could be a further indication of home prices being out of reach for would-be home buyers.

Mortgage Rates, New Jobless Claims Dip

Freddie Mac reported lower mortgage rates last week; 30-year fixed mortgage rates averaged 4.62 percent and were one basis point lower than in the prior week.  15-year fixed mortgage rates were unchanged at an average of 4.07 percent.

The average rate for 5/1 adjustable rate mortgages was six basis points lower at 3.98 percent. Discount points averaged 0.40 percent for fixed rate mortgages and 0.30 percent for 5/1 adjustable rate mortgages.

First-time jobless claims fell last week to 206,000 claims filed. Analysts predicted 218,000 new jobless claims based on the prior week’s reading of 206,000 new unemployment claims filed.

What‘s Ahead

This week’s scheduled economic readings include Case-Shiller Home Price Indices, new and pending home sales and weekly readings on mortgage rates and new jobless claims. Government shutdown may impact some readings.

Big Cities vs. Secondary Markets: Where to Buy?

Atlanta, Charlotte, New York and Los Angeles are always on the real estate radar because of big ticket sales and good media coverage. The secondary markets – those markets without the celebrity undertones – may actually be better deals. With the price of borrowing money rising and occupation rates dropping in primary markets, places like Nashville and Birmingham are looking better to investors.

Where Are the Secondary Markets?

A secondary market is generally defined as a mid size or large city that has recorded an uptick in growth in the immediate past. They do not have quite the economic clout or media presence of a primary market, although they may rival each other in terms of population.

Generally, the influx of new attention for a secondary market will be from young professionals. These are people who are upwardly mobile and seeking new forms of skilled employment. This is what has driven the markets of cities like San Antonio, San Jose, San Diego, Phoenix and Philadelphia to new heights in recent years.

What Do Experts Think?

Experts believe that primary markets have topped out for the time being. With occupancy rates dropping from highs in the lower 90 percentiles, primary markets are just too saturated for their own good. Landlords in these areas are more unwilling to lower rents in these areas, because there are usually more high income earners established there who want to stay in the area to keep a legacy job or maintain a family.

Rising real estate prices and interest rates also put the primary housing market out of the reach of many outsiders. Researchers have found that doing real estate business in a secondary market can provide an investor with a 16% premium. The cost of real estate itself is around 38% lower. So are the costs of maintaining a property (energy costs 22% lower; labor costs 14% lower).

The New Primary Markets?

With respect to income, secondary market housing prices are up to 45% more affordable. Individuals notice this, and so do commercial investors and developers. This is why the mad rush to cities like Phoenix and San Diego will be red hot for the next few years, say investors, even in relation to established cities like Los Angeles and New York.

No matter where you are looking to purchase your new home, it is essential that you rely on your trusted mortgage professional to explore your financing options. Finding out how much you can afford can be a key element in deciding which market could be the best fit for you. 

How To Choose Between Laminate And Hardwood Flooring

Picking out a new flooring can be exciting. After all, as anyone knows, new flooring in a home or business property can completely change the entire atmosphere. A common question asked by commercial and residential property owners is “Should I go with laminate or hardwood flooring?”

If you have found yourself asking this question, understand that both types of flooring materials each have their own pros and cons. For the most part, hardwood flooring tends to be more expensive than laminate but this isn’t always the case.

Let’s take a quick look at the benefits and disadvantages of laminate and hardwood flooring.

Pros And Cons Of Laminate Flooring

Most times, laminate flooring will be about 50 percent less expensive than hardwood flooring. It has a beautiful finish and can give the appearance of a real hardwood floor. Also, being that it is made of pressed wood, it tends to be a bit more durable than hardwood as well as more scratch resistant.

Although it’s usually easier to clean, if you don’t invest in high-quality laminate, you’ll end up with flooring that looks as if it has fake wood grains. In all actuality, this is what cheap laminate flooring is: cheap wood grains pressed together.

Pros And Cons Of Hardwood Flooring

Although hardwood flooring is more susceptible to scratching, you may like this characteristic because it gives it a more natural look. When it comes to beauty, nothing beats real hardwood flooring, and best of all, it tends to last many years longer than laminate. Because of this, even though such flooring is a bit more expensive than laminate, being that it lasts longer, it’s considered to be a very good investment.

Think About The Lighting In Your Home

One very important aspect to think about when choosing flooring for your home is whether or not your floors see a lot of daylight. The sun and its UV rays will cause real hardwood flooring to fade. Laminate on the other hand is usually made with UV protection. If you like to keep your blinds open and let natural sunlight in, it’s usually best to invest in laminate flooring.

Don’t let choosing the perfect flooring material for your home stress you out. With a bit of research, you’ll be well on your way to deciding whether laminate or hardwood is a better investment for your lifestyle and personal needs.

If you are in the market for a new home or interested in refinancing your current property, be sure to enlist the help of your trusted mortgage professional.

How Will Interest Rates Affect the Market in 2019?

Forbes and other reputable publications have predicted a continued rise in interest rates over 2019. The initial shock of the Fed’s action caused a slowdown in real estate markets over the final part of 2018. As the shock wears off, experts are divided as to whether more expensive money will continue to translate into lower housing starts and occupancy rates for primary markets.

Many experts believe that the rising 2018 interest rates have not yet baked themselves into the real estate market. They point to past instances of relatively high real estate hikes and the slower uptake into the property market the following year. Proponents of fast action uptake point to a much closer relationship between federal interest rates and the consumer real estate market.

The Edge Of The Housing Affordability Curve

Most consumers were hanging on the edge of housing affordability during the time of low interest rates, this set of experts argues. The second that the Fed raised interest rates, a portion of Millennials immediately became unable to buy a first house or even retain occupancy in more expensive real estate markets such as San Francisco, Los Angeles and New York.

The Fed’s Limited Reach?

The Fed controls short-term rates, but the market controls long-term rates. Over time, these long-term interest rates will be much more influential on how the real estate market will perform over the next five years. Most experts expect commercial banks to try to hold down long-term interest rates to maintain a balance between supply and demand in new housing starts. They stand to lose money over the next few quarters if they cannot accomplish this. However, the banks may struggle to control long term interest rates due to news of the Fed raising interest rates which may scare some people out of the market.

Millennials and Secondary Markets Run The World

For those who want to draw a trend line moving forward, real estate activity in secondary markets may be a good leading indicator of how the rest of the market will behave. Watching cities such as Nashville, San Diego, San Jose and Dallas may provide insights as to just how many displaced Millennials will be able to access the housing market in the United States over the next few years. This is the core group that will control housing prices in America, so they are definitely the ones to watch in terms of movement.

For up to date financial information, be sure to contact your trusted mortgage professional.

What is the Multifamily Market in 2019 Looking Like?

A growing supply of housing, volatility in the marketplace and risks in the development process all affected the multifamily market in 2018. In 2019, these three factors will continue to move the needle.

The Housing Supply

Markets like Boston, Seattle and Nashville are growing supply faster than demand. From 2015 to 2017, developers were building like crazy and landlords were enjoying rent increases of 5-7% year over year. They built too much, and the peak has showed itself. Only top markets like Atlanta and Charlotte can justify their cost of living increases. The rest will likely see slower growth and possibly losses in rent values and occupancy rates.

Market Volatility

Secondary markets are experiencing problems in their local economies, which is driving away the multifamily market. Fewer jobs means less security. Most multifamily clients are looking for stability, and they move into and out of markets based on that. Experts are predicting a consolidation of these families into larger markets.

Interest Rates

The volatility in the market has been accompanied by higher interest rates, which makes money harder to borrow. The seller’s market has held out for so long that a turnaround was almost inevitable, and most experts agree that the current trend is more than just a short term hiccup. We are looking at a real market correction.

The Effect

These three variables come together to create a multifamily market that is looking better for buyers than it has in a long time. Entrants into the market who have been waiting for a price dip began to see it in the latter part of 2018. All signs point to this price trend continuing into 2019.

Just as important as price is location. Although multifamily units will probably be in high supply in secondary markets, these units will be more difficult to fill. What you may see is a consolidation towards markets like Atlanta and Charlotte from multifamily buyers as well as renters.

You may also see speculators who choose to purchase in secondary markets and wait for a turnaround. In both cases, you can probably expect a more balanced overall landscape that will eventually stabilize into market values that are anywhere from 10 to 35% off peak.

Talk with your trusted home mortgage professional to discuss the financing opportunities in 2019 for your local market.

What’s Ahead For Mortgage Rates This Week – December 17th, 2018

Last week’s economic reports included readings on inflation and retail sales. Weekly readings on mortgage rates and new jobless claims were also released.

Retail Sales Grow, Inflation Unchanged in November

November retail sales grew by 0.20 percent in November as compared to expectations of 0.10 percent and October’s reading of 1.10 percent growth. Core retail sales, which exclude automotive sales, grew by 0.20 percent and met expectations. Analysts said online stores pushed retail sales growth in November.

Inflation held steady in November as expected. Inflation grew by 0.30 percent in October. Core inflation, which excludes volatile fuel and food sectors, rose by 0.20 percent, which matched October’s reading. Lower fuel prices contributed to the higher Core Price Index reading.

Mortgage Rates, New Jobless Claims

Freddie Mac reported lower mortgage rates last week, which caused an uptick in demand for homes. Rates for a 30-year fixed rate mortgage dropped by 12 basis points and averaged 4.63 percent. Mortgage rates for 15-year fixed rate mortgages dropped 14 basis points and averaged 4.07 percent.

Rates s for 5/1 adjustable rate mortgages averaged 4.06 percent and were three basis points lower than the prior week. Discount points averaged 0.50 percent for fixed rate mortgages and 0.30 percent for 5/1 adjustable rate mortgages.

Last week’s average mortgage rates were the lowest in three months and prompted would-be be home buyers to enter the market.

First-time Jobless claims fell to 206,000 new claims filed as compared to the prior week’s reading of 233,000 new jobless claims filed. Analysts expected 226,000 new claims to be filed. The surge in unemployment claims during the prior week was connected to an early Thanksgiving holiday.

What‘s Ahead

This week’s scheduled economic reports include the National Association of Home Builders Housing Market Index, Commerce Department reports on housing starts and building permits issued. Sales of previously owned homes will be reported.

The Fed’s Federal Open Market Committee will issue its post-meeting statement along with economic projections for 2019. Weekly readings on mortgage rates and new jobless claims will be released along with a monthly report on consumer sentiment.