Category Archives: South Salem

Lower rates should boost spring sales | South Salem Real Estate

The steady mortgage-rate decline is making purchasing a home more affordable just as the spring buying season heats up.

According to the latest data released Thursday by Freddie Mac, the 30-year fixed-rate average dipped to 4.35 percent with an average 0.5 point. (Points are fees paid to a lender equal to 1 percent of the loan amount.) It was 4.37 percent a week ago and 4.40 percent a year ago. The 30-year fixed rate has fallen 16 basis points since the first of the year. (A basis point is 0.01 percentage point.)

The 15-year fixed-rate average slipped to 3.78 percent with an average 0.4 point. It was 3.81 percent a week ago and 3.85 percent a year ago. The five-year adjustable rate average dropped to 3.84 percent with an average 0.3 point. It was 3.88 percent a week ago and 3.65 percent a year ago.

“Today’s news from Freddie Mac should give buyers some optimism this spring as mortgage rates remain at one-year lows,” said Danielle Hale, chief economist at Realtor.com. “But this spring won’t be without its challenges. Most markets are continuing to see rising home prices, which means many buyers will have to make some trade-offs in order to close this year.”6

The National Association of Realtors said Thursday that sales of existing homes declined 1.2 percent to a seasonally adjusted annual rate of 4.94 million last month, the slowest sales rate since November 2015.

During the past 12 months, sales have plunged 8.5 percent. Would-be home buyers are increasingly priced out of the market as years of climbing prices and strained inventories have made ownership too costly. Declining mortgage rates could aid buyers.

The Federal Reserve released the minutes from its January meeting this week, which showed central bank officials unsure about the need for interest rate increases in 2019. Although the Fed doesn’t set mortgage rates, its decisions influence them.

“Wednesday’s release of the minutes from January’s (Federal Open Market Committee) meeting paints a picture of a more muted outlook for interest rates over the next year,” said Aaron Terrazas, Zillow senior economist. “All eyes are on a string of Fed speakers over the coming week, when we will also see a slew of housing market data, which was a soft spot in the economy at the end of last year. However, the January data are unlikely to provide a definitive judgment on the underlying health of the economy. The market signal in January home sales and permits is likely blurred by the partial federal government shutdown and the polar vortex that hit much of the country mid-month.”

Mixed economic news is putting a damper on rates. More than 84 percent of purchase borrowers and 81 percent of refinance borrowers were offered rates below 5 percent last week, according to LendingTree’s weekly mortgage comparison shopping report.

Bankrate.com, which puts out a weekly mortgage rate trend index, found nearly two-thirds of the experts it surveyed say rates will remain relatively stable in the coming week. Michael Becker, branch manager at Sierra Pacific Mortgage, is one who predicts rates will hold steady.

“Mortgage rates follow the 10-year Treasury and have similarly been consolidating with small differences in rates on a day-to-day and week-to-week basis,” Becker said. “At some point, rates will break out of this tight range and we will see either a spike or drop in rates. If global economic concerns dominate markets, then we will see a drop in rates. If optimism based on progress on trade wars or central bank dovishness prevails in the markets, then there will be a spike in rates. For now, I think rates continue their consolidation pattern and that mortgage rates will be flat in the coming week.”

Meanwhile, mortgage applications have finally started to pick up, according to the latest data from the Mortgage Bankers Association. The market composite index — a measure of total loan application volume — increased 3.6 percent from a week earlier. The refinance index rose 6 percent from the previous week, while the purchase index grew 2 percent.

The refinance share of mortgage activity accounted for 41.7 percent of all applications.

“After slumping over the past month, purchase mortgage applications reversed course, rising nearly 2 percent over the past week and 2.5 percent from a year ago,” said Bob Broeksmit, MBA president and CEO. “With mortgage rates lower than in previous months and holding steady, lenders are indicating that prospective buyers may be eager to start their home search before the spring buying season gets underway.”

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https://www.chicagotribune.com/business/ct-biz-mortgage-rates-keep-falling-20190221-story.html

Mortgage rates average 4.41% | South Salem Real Estate

Freddie Mac (OTCQB: FMCC) today released the results of its Primary Mortgage Market Survey® (PMMS®), showing that the 30-year fixed-rate mortgage fell to a 10-month low. Sam Khater, Freddie Mac’s chief economist, says, “The U.S. economy remains on solid ground, inflation is contained and the threat of higher short-term rates is fading from view, which has allowed mortgage rates to drift down to their lowest level in 10 months. This is great news for consumers who will be looking for homes during the upcoming spring home buying season. Mortgage rates are essentially similar to a year ago, but today’s buyers have a larger selection of homes and more consumer bargaining power than they did the last few years.”

News Facts     30-year fixed-rate mortgage (FRM) averaged 4.41 percent with an average 0.4 point for the week ending February 7, 2019, down from last week when it averaged 4.46 percent. A year ago at this time, the 30-year FRM averaged 4.32 percent. 

15-year FRM this week averaged 3.84 percent with an average 0.4 point, down from last week when it averaged 3.89 percent. A year ago at this time, the 15-year FRM averaged 3.77 percent. 

5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 3.91 percent with an average 0.3 point, down from last week when it averaged 3.96 percent. A year ago at this time, the 5-year ARM averaged 3.57 percent.Average commitment rates should be reported along with average fees and points to reflect the total upfront cost of obtaining the mortgage.

Visit the following link for the Definitions. Borrowers may still pay closing costs which are not included in the survey.

Con Ed cannot supply more natural gas halting development in Westchester | South Salem Real Estate

Local and state officials fear Westchester’s recent development renaissance will come to a screeching halt because Con Edison said it can’t take on new natural gas customers. 

Con Edison issued a statement Friday saying the demand for gas is “reaching the limits of the current supplies to our service area.” 

“As a result, and to maintain reliable service to our existing natural gas customers on the coldest days, we will no longer be accepting applications for natural gas connections from new customers in most of our Westchester County service area beginning March 15, 2019,” Con Edison said in its statement. 

Jim Denn, spokesperson for the Department of Public Service, said Con Ed didn’t propose a pipeline “to meet or address growing demand.”

“To help prospective customers meet their energy needs in light of these market dynamics, PSC will be monitoring Con Edison’s engagement with customers to explore options to reduce their energy needs or meet their needs through non-natural gas energy sources,” Denn said in a statement. 

State Assemblywoman Amy Paulin, D-Scarsdale, said it’s going to “devastate” local development, particularly in cities like New Rochelle and Yonkers, which are in the midst of redeveloping their downtowns. 

A portion of the 10 acres of solar panels atop the

A portion of the 10 acres of solar panels atop the headquarters of Diamond Properties in Mount Kisco. (Photo: Submitted)

“These projects are on a marginal budget, and we’re not going to get the economic development that we’re hoping for,” Paulin said. “Compounding the problem is affordable housing. Developers won’t be able to do them at all, so this is a huge problem for our county and it’s disappointing that we’re being told two months prior (to the start of the moratorium).”

AP
Assemblywoman Amy Paulin,D-Scarsdale, has put together a coalition to fight the IRS.

AP Assemblywoman Amy Paulin,D-Scarsdale, has put together a coalition to fight the IRS. (Photo: Associated Press)

New Rochelle’s downtown redevelopment attempts have historically started and crumbled, as it did in the 1980s, which left a pile of debris near the train station for more than a decade, and again during the most recent economic recession. 

The city experienced a development boom since it changed its downtown zoning code in 2015, with several projects already being built and more in the pipeline, but Paulin worries that this could put a pin in the balloon. 

“I’m worried it will (stop the redevelopment),” she said. “I spoke to the mayor, and he’s worried as well. We’re going to meet with Con Ed this week. I’m hoping we can figure out something that we can do.”

New Rochelle Mayor Noam Bramson said, “This obviously has serious potential implication for our entire region.”

“We are consulting with government and utility officials in order to better understand options and constructive paths forward,” Bramson said. “It is essential that solutions emerge.”

In Yonkers, Mayor Mike Spano said the city’s building boom could be affected for as long as this moratorium lasts. 

“Developers are already telling us they can’t build more housing or commercial buildings until this is resolved,” he said. “Con Ed and the Public Service Commission need to implement an immediate plan to solve this.”

Denn said the PSC ordered utility companies, including Con Ed, to increase energy efficient and create “demand-response programs to lower gas demand and save consumers money.”

“These programs are up and running,” he said. “As these gas efficiency and demand response measures take hold, as well as others to meet demand growth, the PSC will carefully review changing market conditions and consider most appropriate additional steps Con Edison should take to meet the needs of its customers.”

The northernmost sections of the county have more capacity and may still be able to accept new customers, Con Edison said in its statement, and existing customers are not affected by the moratorium.

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https://www.lohud.com/story/news/local/westchester/2019/01/18/con-eds-natural-gas-moratorium-halt-development-westchester/2616778002/

Mortgage rates fall | South Salem Real Estate

Bernadette Gatsby/Unsplash
Bernadette Gatsby/Unsplash

Several benchmark mortgage rates decreased today. The average rates on 30-year fixed and 15-year fixed mortgages both fell. The average rate on 5/1 adjustable-rate mortgages, meanwhile, also declined.

30-year fixed mortgages

The average rate for the benchmark 30-year fixed mortgage is 4.51 percent, a decrease of 7 basis points over the last week. A month ago, the average rate on a 30-year fixed mortgage was higher, at 4.68 percent.

At the current average rate, you’ll pay a combined $507.28 per month in principal and interest for every $100,000 you borrow. That’s down $4.17 from what it would have been last week.

You can use Bankrate’s mortgage calculator to get a handle on what your monthly payments would be and see the effect of adding extra payments. It will also help you calculate how much interest you’ll pay over the life of the loan.

15-year fixed mortgages

The average 15-year fixed-mortgage rate is 3.76 percent, down 4 basis points over the last seven days.

Monthly payments on a 15-year fixed mortgage at that rate will cost around $728 per $100,000 borrowed. Yes, that payment is much bigger than it would be on a 30-year mortgage, but it comes with some big advantages: You’ll save thousands of dollars over the life of the loan in total interest paid and build equity much more rapidly.

5/1 ARMs

The average rate on a 5/1 ARM is 3.94 percent, down 6 basis points since the same time last week.

These types of loans are best for those who expect to sell or refinance before the first or second adjustment. Rates could be substantially higher when the loan first adjusts, and thereafter.

Monthly payments on a 5/1 ARM at 3.94 percent would cost about $474 for each $100,000 borrowed over the initial five years, but could increase by hundreds of dollars afterward, depending on the loan’s terms.

Where rates are headed

To see where Bankrate’s panel of experts expect rates to go from here, check out our Rate Trend Index.

Want to see where rates are right now? See local mortgage rates.

ProductRateChangeLast week
30-year fixed4.51%-0.074.58%
15-year fixed3.76%-0.043.80%
30-year fixed jumbo4.42%-0.034.45%
30-year fixed refinance4.55%-0.084.63%

Last updated: January 1, 2019.

Methodology: The rates you see above are Bankrate.com Site Averages. These calculations are run after the close of the previous business day and include rates and/or yields we have collected that day for a specific banking product. Bankrate.com site averages tend to be volatile — they help consumers see the movement of rates day to day. The institutions included in the “Bankrate.com Site Average” tables will be different from one day to the next, depending on which institutions’ rates we gather on a particular day for presentation on the site.

To learn more about the different rate averages Bankrate publishes, see “Understanding Bankrate’s Rate Averages.”

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https://www.bankrate.com/mortgages/rates/mortgage-rates-for-tuesday-january-1/

Left wing Seattle bars landlords from doing criminal background checks | South Salem Real Estate

A new Seattle law says landlords can’t do criminal background checks on renters. Landlords in other states are looking upon the dispute surrounding the law with interests

With slews of tent encampments in a fast-growing city flush with tech-sector cash, it’s tough questioning Seattle’s serious problem with homelessness and affordable housing.

But an unprecedented new city law — forbidding landlords from checking into potential renters’ criminal past — is very much in dispute and setting up a closely-watched court battle.

Landlords argue their free speech, property rights and possibly their safety is being jeopardized by a law that forces them to close their eyes to relevant public information about possible tenants. They’re backed by landlord groups and background screeners who call the ordinance a perilous precedent.

The “Fair Chance Housing Act” was anything but that, according to landlords’ lawyers. Ethan Blevins, an attorney at the Pacific Legal Foundation, said the law’s premise “is this paternalistic idea that the city gets to decide what information is relevant or important to a landlord’s decision making process.”

An unprecedented new city law — forbidding landlords from checking into potential renters’ criminal past — is very much in dispute and setting up a closely-watched court battle.

The City of Seattle and tenant advocates are fighting back. They say the act helps chip away at a housing crisis, especially for over-policed minorities disproportionately saddled with arrests and convictions.

It’s a court case that landlords and lawmakers in the other parts of the country are looking at with keen interest. A ruling upholding the law could pave the way for its enactment elsewhere, said Kimberlee Gunning, a lawyer for tenants advocates at Columbia Legal Services. “Folks across the country are watching this,” she said.

Though the law has been in effect since February, a judge will be scrutinizing its merits following President Donald Trump’s enactment of criminal justice reforms. The “First Step Act” signed Friday, among other things, broadens re-entry efforts and quicken a well-behaved inmate’s release.

The new federal law was a sign Seattle “on the vanguard” of needed reforms with its own housing law, Herbold said. The city also was one of the first cities to enact paid sick leave laws and $15 minimum wage requirements, she noted.

“We’re all safer if people are housed,” Council member Lisa Herbold, the bill’s chief sponsor, told MarketWatch. “You’re reducing the likelihood of recidivism. That goes for violent crimes as well.”

What should matter to landlords, Herbold said, is someone’s ability to make the rent on time and not wreck the place; Blevins said criminal background checks had bearing for those kinds of issues.

While other cities limit how far in time landlords can delve into a tenant’s criminal past, Herbold said Seattle’s law appears to be the first blocking any inquiry at all. Those involved should learn about Singleton Law Firm legal assistance, there are cases of the efficient way out.

“It is an embarrassment and shame that a city like ours, with so many resources, is not doing a very good job taking care of those who have the most significant barriers to access in housing,” Herbold said, “And having a mark on your background related to the criminal justice system is one of those barriers.”

The law’s premise ‘is this paternalistic idea that the city gets to decide what information is relevant or important to a landlord’s decision making process.’

—Ethan Blevins, an attorney at the Pacific Legal Foundation

January 2017 tally put Seattle’s homeless population around 8,500. Average Seattle rents jumped 43% from 2012 to 2017, accord to a local task force. During that time, vacancy rates in buildings with at least 20 units have hovered between 4% and 5%, it said. Almost one-third of Seattle residents have an arrest or conviction on their record, court papers said.

The city is already locked in two other lawsuits with landlords, who object to ordinances capping deposits and requiring landlords to take the first applicant who comes to them. A judge upheld the limits on move-in costs, but another judge voided the rule on taking the first tenant to come along. Both cases are being appealed.

Ahead of its unanimous passage, some residents in support of the Fair Chance Housing Act said landlords kept dredging up their past as they tried to make a new life. One man testified at a bill hearing he had enough money, good credit and a good rental history. “But I kept hearing ‘no.’” The law, he said, “will help level the playing field for some of us.”

The plaintiffs include landlords who rent out a handful of units and live close to their tenants. One landlord couple that’s suing, Chong and MariLyn Yim, say they charge below-market rent prices. But they’ll “have to raise rents in order to build up a larger cushion of reserves to absorb the risks they face under the new law,” court papers said.

The Yims, two other private landlords and the Rental Housing Association of Washington are asking Seattle Federal Judge John Coughenour to call the statute unconstitutional.

Some say Seattle’s law is not an outlier

The law prevents landlords from checking prospective tenants for any convictions or arrests. The ordinance does not apply to convicted sex offenders who committed their crime from age 21 and above. It does shield juvenile criminal records from landlord eyes, including those for sex-crime charges. The law doesn’t apply to federally-assisted housing, the landlords note.

Renters across America face a mix of federal, state and local laws when it comes to what publicly-funded and private landlords can weigh when deciding on a tenant.

There’s a variety of anti-discrimination laws barring the consideration of race, sex, religion and disability. The range of state and city rules for considering tenant’s criminal past get more complicated — with many laws now confining what parts of a criminal record landlords should weigh, housing advocates point out.

“Seattle’s ordinance is by no means an outlier. It is part of a larger trend at the federal, state, and local levels toward removing barriers for people reentering society,” said lawyers for the National Housing Law Project and the Sargent Shriver National Center on Poverty Law.

But renters on the private market don’t have “the same constitutional protections against arbitrary admission denials as applicants to federally subsidized housing,” the organizations said, noting 87% of Seattle’s rental housing stock is owned by private landlords.

A spokesman for the city’s Office for Civil Rights said that, as of last month, the agency has filed nine civil charges against several landlords since the law went on the books. Four ended in settlement, four are pending and one was dismissed.

Clashing Arguments

Blevins acknowledged city officials are trying to cope with “legitimate problems” of recidivism and the criminal justice system’s disproportionate lean on minorities. “The problem is, they’ve taken the wrong approach by burdening landlords with this inability to look into valid information about rental applicants.”

Blevins noted Seattle has been under a federal consent decree since 2012 to stop biased policing. “It’s ironic for them to point the finger,” he said. In January, a judge said the police was in full compliance and had two years to keep it up before the order lifted.

Landlords argue they could be exposed to liability. In one pending lawsuit, a family of a raped and murdered tenant is suing a Chicago property manager for not running a background check on a fellow tenant.

Landlords argue they could be exposed to liability if they don’t do their due diligence. There was one dire example in a pending lawsuit where a family of a raped and murdered tenant is suing a Chicago property manager for not running a background check on a fellow tenant.

The landlord arguments are seconded by supporting groups like the National Apartment Association and the National Consumer Reporting Association, which assailed the ordinance as vaguely worded.

John McDermott, general counsel of the National Apartment Association, a trade association for owners and property managers in the rental market, said Seattle’s law was “stunning in saying our solution to the [shortage of affordable housing] problem is you should make decisions with less information.”

But tenants’ advocates said the ordinance was a break from Seattle’s troubled housing history.

Seattle was a segregated city with racially restrictive covenants and “redlining” in its past — not to mention gentrification that were now pricing out certain areas, filings said. Companies like Amazon AMZN, +5.21%  and StarbucksSBUX, +2.54%   are based in Seattle, while the headquarters of MicrosoftMSFT, +3.39% are nearby.

Background checks on their face didn’t ask about race, but landlords, playing “private juries and judges” kept the divided city’s status quo intact.

“The Ordinance will not eliminate racism and segregation in Seattle entirely”, said lawyers for the groups Pioneer Human Services, a social enterprise based in Washington, D.C. that serves individuals released from prison, and Tenants Union. “But, by eliminating some of the barriers to finding adequate housing, it will strengthen families and, by extension, communities.”

Arguments about landlord duties to protect tenants were “misleading,” the court papers said. Landlords can’t be expected to be on notice about a tenant’s past when they’re not even allowed to look at a person’s criminal past, housing advocates said.

The sides have to file all their arguments in the suit by next month.

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https://www.marketwatch.com/story/these-us-stock-benchmarks-are-already-in-a-bear-market-and-the-sp-500-isnt-far-behind-2018-12-26?mod=newsviewer_click

Rising interest rates killing economy | South Salem Real Estate

As interest rates rise, access to capital is increasingly restricted for the small businesses that make up the core of the American economy. However, some far-left lawmakers and activists want to restrict access even further under the guise of protecting consumers.

Rising interest rates mean that the rate at which banks can lend reserve balances to other banks is rising, increasing the costs for small businesses to receive traditional loans from banks. As costs exponentially increase, consumers will have even less cash due to paying off inevitably higher interest rates on credit cards.

During the summer, many economists warned that rising interest rates would restrict capital to small businesses over time. Rohit Arora explained in Forbes on June 20, 2018 that small businesses should apply early for loans because capital will be restricted to them over time as a result of rising interest rates.

“Companies that need to borrow money for growth incur a higher cost of capital when interest rates go up. This includes firms that have already borrowed money since most small business loans come with floating, rather than fixed, rates,” Mr. Arora wrote.

While interest rate hikes will have a negligible impact on larger companies seeking access to capital, smaller companies will find slim opportunities for access to cash. In response to this growing crisis of capital, a highly specialized form of financing company has emerged, dubbed the merchant cash advance (MCA) business model.

The merchant cash advance model is an alternative form of financing, rather than a traditional loan. Companies in need of a quick influx of capital receive cash from a MCA company in exchange for a portion of future sales or profits. Since the MCA model doesn’t constitute a traditional loan, it is not subjected to regulations on annual percentage rates of interest.

These cash advances range from $5,000 to $500,000 and have advantages over the route of acquiring a traditional loan. For example, seasonal businesses that operate for many months without a cash flow can easily acquire sorely needed capital utilizing the MCA model.

These financial instruments have become the preferred method of acquiring capital to pay expenses for many small businesses who are not excited about long waits for approval and having to put up personal property, like a home, as collateral for a small business loan.

Unsurprisingly, liberals in California who favor increased federal regulations over free markets are targeting this innovative form of financing.

In response to California state legislation attacking the MCA model, the Commercial Finance Coalition (CFC), an organization seeking to standardize the MCA industry, wrote a letter opposing “undue hardship upon small business” by “removing their freedom of choice in the financial marketplace.” The California example is being considered by other states as a way to crack down on a handful of bad actors in the industry in a way that will sideline all the other ethical companies who use this model of financing small businesses in a way that both benefits small business as a whole and the providers of this financial instrument.

“Small businesses need funding to maintain and expand their operations and CFC member companies offer fair and innovative marketplace alternatives to typical term loans and have filled the void created by the decline in small business lending by larger, traditional banks. The continuation of this bill will not only hurt our business, but will hurt the countless small and medium sized businesses across the state,” the letter continues.

Small businesses remain the backbone of the U.S. economy. According to a Small Business Administration 2015 report, 99.9 percent of U.S. employer firms are small businesses that employ 47.5 percent of private sector employees. When companies have no alternative, an MCA agreement can mean the difference when it comes to staying in business, and it’s important that the federal government respect free markets by preserving small business owners’ freedom of financial choice.

When critics on the left decry the high interest rates associated with MCA agreements and call for regulation, they not only misunderstand the industry entirely, but deny the free agency of millions of small business owners across the country.

MCA agreements fill a need at a time when only 25 percent of small business loan applications are accepted by big banks, small businesses remain desperate for funding. Interference by a overbearing government would not only endanger this burgeoning industries’ financial future, but that of the thousands of small businesses and workers that are dependent upon it.

 

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https://www.washingtontimes.com/news/2018/dec/11/small-business-the-casualty-of-rising-interest-rat/

America’s wavering housing market all depends on what Fed does next | South Salem Realtor

Why 2019 may not lead to a home buyer’s market

H. ARMSTRONG ROBERTS/CLASSICSTOCK/Everett Collection

As 2018 winds to a close, the housing market has shown signs of a slowdown. Wages are rising, according to the most recent figures released Friday, which economists say may give the Federal Reserve more impetus to raise interest rates later this month.

Throughout this year, observers have begun to speculate that the country’s housing market may have hit its peak. Meanwhile, millions of Americans continue to wait on the sidelines. Housing inventory remains incredibly tight, meaning that buying a home is a very expensive and difficult proposition for many. At the same time, expensive rents and low wages have constrained people’s ability to save up for a down payment.

And 2019 appears set to bring more of the same. “I would still rather be a seller than a buyer next year,” said Danielle Hale, chief economist at real-estate website Realtor.com. Here is what forecasters predict the New Year will hold for America’s housing market:

Mortgage rates will continue to rise, causing home prices and sales to drop

In the Dec. 7 week, the interest rate on a fixed-rate 30-year mortgage was hovering 4.75%,down six basis points. But by this time next year, experts predict it will be even higher.

Realtor.com estimated that the rate for a 30-year mortgage will reach 5.50% by the end of 2019, while real-estate firm Zillow estimated that it could hit 5.80% in a year’s time. Mortgage liquidity provider Fannie Mae was more moderate, predicting that rates will only increase to 5% by then.

Either way, homebuyers can expect to pay more in interest if they buy next year. And rising mortgage rates will cause ripple effects throughout the market, said Daren Blomquist, senior vice president at real-estate data firm Attom Data Solutions.

“What’s driving the slowdown in price appreciation and the rise in inventory is not so much that inventory is being created, but that demand is decreasing,” he said. “This is an extremely mortgage-rate sensitive housing market.”

Realtor.com only expects the national median home price to increase 2.2% next year and for sales to drop 2%. Zillow was a bit more upbeat, expecting home prices to rise 3.8%. (In October, the median sales price only increased 3.8% from a year earlier amid a 1.8% annual uptick in home sales, the first such increase in six months.)

Added inventory won’t make it a buyer’s market

In some of the nation’s priciest markets, housing inventory has improved in recent months, relieving some of the inventory-related constraints on housing markets.

But that’s not good news for buyers or sellers. The increase in inventory in this case is more the result of a decrease in demand because of rising interest rates than it is a sign of new homes being built.

For sellers, this shift will lead to fewer offers and bidding wars, which could in turn could cause some to feel pressure to drop their asking price. However, all of these factors won’t outweigh the price appreciation that’s occurred in recent years. “You’re still likely to walk away with a decent profit in 2019 if you sell,” Hale said.

Moreover, the uptick in inventory has mostly occurred in the pricier tier of homes, meaning that the change doesn’t directly benefit buyers. Rather, it could provide some wiggle room for people looking to upgrade their home. That in turn might marginally expand the number of starter homes on the market.

People will continue to move away from costly housing markets

A trend that picked up pace in 2018 was the exodus from some of the nation’s priciest housing markets. Millions of people have chosen to leave California, for instance, and have headed toward Sunbelt cities like Las Vegas and Phoenix.

That trend won’t stop in 2019, which is good news for people looking to sell homes in smaller cities. “Home buyers are going to look for affordability and, often times, that will mean moving from a high cost major market to a lower cost secondary market,” Hale said. Many of these cities, such as Raleigh, N.C., and Nashville, Tenn., have growing economies and healthy job markets, further sweetening the deal.

Another factor that could fuel migration in the future is the new tax code signed into law by President Trump in 2017, which removed the deductions for state and local taxes. Taxpayers will only fully feel the effects of that change for the first time next spring as they receive their refund checks in the mail, said Aaron Terrazas, senior economist at Zillow ZG, -1.57%

“You’ve already seen some of the backlash to the tax bill in the elections that happened in New Jersey and Orange County,” Terrazas said. “Whether or not it spurs migrations, that’s something that happens pretty slowly. People certainly get upset and vote. Actually picking up and moving is a whole other level of seriousness.”

The threat of a recession remains a big question mark

The economy is still strong, but it’s unclear for how long that will continue to be the case. Economists have predicted that a recession could come as soon as late 2019.

Whenever it occurs, the recession is sure to shrink demand for homes and cause prices and sales to drop. The magnitude of those effects will depend on how bad the recession is. In short, the more jobs that are lost, the more hard-hit the housing market will be.

And the housing market may begin to feel the recession before it even starts. With memories of the pre-2008 housing bubble still fresh in people’s minds, would-be homebuyers may be hesitant to purchase a property if they believe they’d be buying at the top of the market in doing so.

“That could be more detrimental to the housing market than the actual underlying issues,” Blomquist said.

read more…

https://www.marketwatch.com/story/why-2019-wont-lead-to-a-home-buyers-market-2018-11-28

Record number of million dollar homes | South Salem Real Estate

The million-dollar home is no longer such a rare species.

The number of U.S. homes valued at $1 million or more increased by 400,702 this year, the largest annual rise since the housing price recovery began in 2012, according to a new study by real estate research firm Trulia. Slightly more than 3 million homes nationally, or 3.6% of the total, are worth at least $1 million, up from 3.1 percent last year and 1.5 percent in 2012.

Not surprisingly, many of the freshly minted million-dollar units are in California, which already boasts the most in the country. The San Jose and San Francisco metro areas have the largest shares of $1 million homes and also notched the biggest increases over the past year.

Meanwhile, 29 cities and towns joined those with a median home value of $1 million or more this year, bringing the total to 201. Nineteen municipalities joined the million-dollar club last year.

They include San Jose, California, whose median value rose from $930,900 to $1.09 million; Fremont, California ($966,000 to $1.13 million); Burbank, California ($845,700 to $1.01 million); Newton, Massachusetts ($977,200 to $1.07 million); and Shelter Island, N.Y. ($903,500 to $1.15 million)

Trulia Senior Economist Cheryl Young attributed the big jump to widespread home price increases in recent years, with the median national home price climbing 7.6 percent the past year to $220,100. The median, or midpoint, of all home prices is up 45.3 percent since 2012. Housing demand has been strong while supplies are low, driving values higher.

“Home values have been escalating… And at about $1 million, there’s even greater appreciation,” she says.

Of the roughly 15,100 larger neighborhoods around the country analyzed by Trulia, 838 have median home values of $1 million or more and about two thirds of those are in California. Nearly 30 percent of California’s neighborhoods have a median home price of at least $1 million, the most by far of any state. New York, Florida and Washington followed.

The 10 metro areas that posted the largest increases in share of $1 million homes the past year:

San Jose, California

Share of million-dollar homes, October 2017: 55.7 percent

Share, October 2018: 70 percent

San Francisco

Share of million-dollar homes, October 2017: 67.3 percent

Share, October 2018: 81 percent

Oakland, California

Share of million-dollar homes, October 2017: 24.9 percent

Share, October 2018: 30.7 percent

Honolulu

Share of million-dollar homes, October 2017: 16.2 percent

Share, October 2018: 19.8 percent

Orange County, California

Share of million-dollar homes, October 2017: 17.2 percent

Share, October 2018: 20.2 percent

Los Angeles

Share of million-dollar homes, October 2017: 17.5 percent

Share, October 2018: 19.6 percent

San Diego

Share of million-dollar homes, October 2017: 11.8 percent

Share, October 2018: 13.8 percent

Seattle

Share of million-dollar homes, October 2017: 11.4 percent

Share, October 2018: 13.3 percent

Ventura County, California

Share of million-dollar homes, October 2017: 8.9 percent

Share, October 2018: 10.5 percent

Long Island, N.Y.

Share of million-dollar homes, October 2017: 8.8 percent

Share, October 2018: 10.1 percent

read more…

https://www.usatoday.com/story/money/personalfinance/real-estate/2018/11/09/million-dollar-homes-number-increased-400-000-year/1936628002/

Home builder confidence plummets | South Salem Real Estate

  • Rising mortgage rates and continued home price growth are hurting affordability and fast becoming a toxic cocktail for the nation’s home builders.
  • Sentiment among home builders dropped 8 points in November to 60 in the National Association of Home Builders/Wells Fargo Housing Market Index.
  • The reading was the lowest reading since August of 2016, but anything above 50 is still considered positive.

Homebuilder confidence plummets to the lowest level in more than 2 years

Rising mortgage rates and continued home price growth are hurting affordability and fast becoming a toxic cocktail for the nation’s homebuilders.

Sentiment among homebuilders dropped 8 points in November to 60 in the National Association of Home Builders/Wells Fargo Housing Market Index. That is the lowest reading since August 2016, but anything above 50 is still considered positive. The index stood at 69 in November of last year and hit a cyclical high of 74 last December.

“Builders report that they continue to see signs of consumer demand for new homes but that customers are taking a pause due to concerns over rising interest rates and home prices,” said NAHB Chairman Randy Noel, a builder from LaPlace, Louisiana.

Of the index’s three components, current sales conditions fell 7 points to 67, sales expectations in the next six months dropped 10 points to 65, and buyer traffic registered an 8-point drop to 45. Buyer traffic had broken out of negative territory earlier this year but now appears to be back in it solidly.

Some of the nation’s largest publicly traded homebuilders, like Lennar and KB Home, lowered their expectations for sales in 2019 in recent earnings releases. There is still a shortage of homes for sale, but newly built homes come at a price premium, and as interest rates rise, new home buyers are consequently hit hardest.

The average rate on the popular 30-year fixed mortgage is now more than a full percentage point higher than it was a year ago. The huge home price gains seen over the last two years are now shrinking, but prices were still up a strong 5.6 percent year over year in September, according to CoreLogic.

“For the past several years, shortages of labor and lots along with rising regulatory costs have led to a slow recovery in single-family construction,” said the NAHB’s chief economist, Robert Dietz. “While home price growth accommodated increasing construction costs during this period, rising mortgage interest rates in recent months coupled with the cumulative run-up in pricing has caused housing demand to stall.”

read more…

https://www.cnbc.com/2018/11/19/homebuilder-confidence-plummets-to-the-lowest-level-in-more-than-two-years-as-demand-stalls.html

Mortgage rates now 4.94% | South Salem Real Estate

Freddie Mac today released the results of its Primary Mortgage Market Survey® (PMMS®), showing that mortgage rates rose significantly across the board.

Highest mortgage rates in seven years

Sam Khater, Freddie Mac’s chief economist, says, “The economy continued to show resilience as strong business activity and growth in employment drove the 30-year fixed mortgage rate to a seven year high of 4.94 percent – up 11 basis points from last week.”

Added Khater, “Higher mortgage rates have led to a slowdown in national home price growth, but the price deceleration has been primarily concentrated in affluent coastal markets such as California and the state of Washington. The more affordable interior markets – which have not yet experienced a slowdown home price growth – may see price growth start to moderate and affordability squeezed if mortgage rates continue to march higher.”

News Facts

  • 30-year fixed-rate mortgage (FRM) averaged 4.94 percent with an average 0.5 point for the week ending November 8, 2018, up from last week when it averaged 4.83 percent. A year ago at this time, the 30-year FRM averaged 3.90 percent. 
  • 15-year FRM this week averaged 4.33 percent with an average 0.5 point, up from last week when it averaged 4.23 percent. A year ago at this time, the 15-year FRM averaged 3.24 percent. 
  • 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 4.14 percent with an average 0.3 point, up from last week when it averaged 4.04 percent. A year ago at this time, the 5-year ARM averaged 3.22 percent.