Daily Archives: April 28, 2015

Homeownership rate drops | South Salem Real Estate

In the latest sign of a changing housing market, homeownership rates are at a quarter-century low, while the rental-vacancy rate is close to the slimmest proportion in more than two decades, according to government data released Tuesday.

The seasonally adjusted homeownership rate, which shows the share of occupied homes in which an owner lives, fell to 63.8% in the first quarter — the lowest proportion since the end of 1989, the U.S. Census Bureau said.

Families with income both above and below the median have seen drops in homeownership rates over the past year.

Weak income growth and difficult-to-get mortgages are likely behind homeownership drops, experts say. Home prices that are running higher aren’t helping, either. Nor are the millions of properties that are underwater — these homes are worth less than owners owe for their mortgage — with borrowers struggling to make monthly payments,

However, long-term trends show that the drop in homeownership is actually pushing the U.S. back to “normal” levels, said Sam Khater, deputy chief economist at CoreLogic, an Irvine, Calif.–based analysis firm. The market may even see further drops, he added.

“In the mid-1990s pro-homeownership policies led to an expansion in mortgage credit and the homeownership rate peaked in 2004 at 69%,” Khater said. “Homeownership rates are back to roughly their long-term trend between the 1960s and 1990s.”

Meanwhile, the rental-vacancy rate ticked up to 7.1% in the first quarter, clinging close to 7% reached at the end of 2014, which was the slimmest share in 21 years. High demand has enabled landlords to crank up rents well past broader inflation growth.

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http://www.marketwatch.com/story/homeownership-rate-drops-to-quarter-century-low-2015-04-28?siteid=bnbh

Slight Uptick in Rates on Loans for New Homes | Lewisboro Real Estate

This morning, the Federal Housing Finance Agency (FHFA) reported that interest rates on home mortgages increased slightly in March. The same was true for the subset of mortgages used to purchase new homes.

On conventional mortgages used to purchase newly built homes, the average contract rate and average initial fees and charges each increased by 2 basis points. The contract interest rate increased from 3.79 percent to 3.81, and the initial fees and charges increased from 1.11 percent to 1.13. The result was an average effective interest rate (which amortizes initial fees over the estimated life of the loan) that edged up from 3.91 to 3.93 percent. That marks the second month in a row that the effective rate has been below 4 percent, following 19 consecutive months above that threshold.

Meanwhile, the average size of the conventional loans used to purchase newly built homes continued to inch toward $340,000, increasing by $400 to $339,000 in March, which is an all-time high.

However, the average price of the new homes purchased with the loans in March declined by $3,800 (a little under 1 percent) to $445,700. Consequently the loan-to-price ratio moved back up over 78 percent for the first time in three months.

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http://eyeonhousing.org/2015/04/slight-uptick-in-rates-on-loans-for-new-homes/

Home Prices in 20 U.S. Cities Increase at Faster Pace | Cross River Homes

Home prices in 20 U.S. cities climbed at a faster pace than forecast in the year ended February, a sign the housing industry may be gaining momentum amid low borrowing costs and continued job growth.

The S&P/Case-Shiller index of property values increased 5 percent from February 2014, the biggest year-to-year gain since August, after rising 4.5 percent in the year ended in January, the group said today in New York. The median projection of 28 economists surveyed by Bloomberg called for a 4.7 percent year-over-year advance. Nationally, prices rose 4.2 percent.

Higher real estate prices may persuade more homeowners to put their properties on the market, boosting the limited inventory that’s been holding some prospective buyers back. More supply, in addition to continued gains in the labor market and looser lending standards, will be needed to help the housing market accelerate after showing inconsistent progress.

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http://www.bloomberg.com/news/articles/2015-04-28/home-prices-in-20-u-s-cities-rose-at-faster-pace-in-february