Monthly Archives: February 2015

Mortgage Loan Rates Post Third Straight Weekly Rise | South Salem Real Estate

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The Mortgage Bankers Association (MBA) released its report on mortgage applications Wednesday morning, noting a week-over-week decrease of 3.5% in the group’s seasonally adjusted composite index for the week ending February 20. That followed a drop of 13.2% for the week ending February 13, mortgage loan rates increased on all five types of loans for the second consecutive week.

On an unadjusted basis, the composite index decreased by 12% week-over-week. The seasonally adjusted purchase index increased 5% compared to the week ended February 13. The unadjusted purchase index fell by 2% for the week and is now 2% lower year-over-year.

Home buying action is typically slow in January and February due to wintry weather. Home price increases have fallen sharply year-over-year, as Tuesday’s Case-Shiller home price index indicated. Interest rates are rising, likely in an effort to attract bond investors.

Adjustable rate mortgage loans accounted for 5.2% of all applications, down from 5.3% in the prior week.

The MBA’s refinance index decreased 8% week-over-week, and the percentage of all new applications that were seeking refinancing declined from 66% in the prior week to 62%.

The FHA share of all applications rose from 15.2% a week ago to 15.3%, and the VA share decreased from 8.0% to 9.6%.

The average mortgage loan rate for a conforming 30-year fixed-rate mortgage increased from 3.93% to 3.99%. The rate for a jumbo 30-year fixed-rate mortgage increased from 3.92% to 4.09%. The average interest rate for a 15-year fixed-rate mortgage increased from 3.24% to 3.28%.

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http://finance.yahoo.com/news/mortgage-loan-rates-post-third-123055690.html

U.S. Housing Stability Improves for Fourth Consecutive Month | Cross River Real Estate

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Freddie Mac today released its newly updated Multi-Indicator Market Index® (MiMi®) showing the U.S. housing market continuing to stabilize at the national level for the fourth consecutive month. Thirty-eight of the 50 states, plus the District of Columbia, and 40 of the 50 metros, are now showing an improving three month trend. Three additional metros entered their benchmarked stable ranges of housing activity including Buffalo, Boston and Nashville.

News Facts:

  • The national MiMi value stands at 74.9, indicating a weak housing market overall but showing a slight improvement (+0.37%) from November to December and a positive 3-month trend of (+1.09%). On a year-over-year basis, the U.S. housing market has improved (+4.41%). The nation’s all-time MiMi high of 121.7 was April 2006; its low was 57.2 in October 2010, when the housing market was at its weakest. Since that time, the housing market has made a 31 percent rebound.
  • Sixteen of the 50 states plus the District of Columbia have MiMi values in a stable range, with the District of Columbia (97.6), North Dakota (97.2), Montana (91.1), Hawaii (89.9) and Wyoming (89.1) ranking in the top five.
  • Eleven of the 50 metro areas have MiMi values in a stable range, with Los Angeles (86.4), Austin (86.3), San Jose (83.9), Houston (83.3), and Pittsburgh (83.3) ranking in the top five.
  • The most improving states month-over-month were Delaware (+1.87%), Michigan (+1.28%), North Carolina (+1.18%), Oregon (+1.18%) and Texas (+0.85%) On a year-over-year basis, the most improving states were Nevada (+19.87%), Colorado (+11.42%), Rhode Island (10.52%), Illinois (+10.14%), and Ohio (+9.27%)
  • The most improving metro areas month-over-month were Detroit (+1.40%), Tampa (+1.28), Kansas City (+1.13%), Louisville (+1.12%), and Charlotte (1.04%). On a year-over-year basis the most improving metro areas were Las Vegas (+19.76%), Denver (+12.14%), Chicago (+10.93%), Providence (+10.35%) and Columbus (+9.36%).
  • In December, 38 of the 50 states and 40 of the 50 metros were showing an improving three month trend. The same time last year, 47 states plus the District of Columbia, and 47 of the top 50 metro areas were showing an improving three month trend.

Quote attributable to Freddie Mac Deputy Chief Economist Len Kiefer:

“Housing markets are getting back on track. The national MiMi improved for the fourth consecutive month. Nearly 80 percent of the state and metro housing markets MiMi tracks are improving or in their stable range of activity. We’ve even seen the MiMi purchase application indicator increase 0.07 percent on a year-over-year basis. Low mortgage rates and moderating house price growth are helping to keep payment-to-income ratios favorable for the typical family in most of the country. In fact, Los Angeles is the only metro market with an elevated MiMi payment-to-income indicator whereas most other markets remain quite affordable. And of course, labor markets are generally improving.

“As we mentioned last month, we’re keeping an eye on markets with deep ties to energy. We’ve seen some deterioration on a month-over-month basis in some of these energy markets. For example, Louisiana has seen its state employment situation deteriorate over the last several months. A declining employment indicator has caused its MiMi score to move from 86.7 in April down to 80.2.”

The 2015 MiMi release calendar is available online. The February release of MiMi includes revisions to the Purchase Applications indicator based on the latest The Home Mortgage Disclosure Act (HMDA) data.

MiMi monitors and measures the stability of the nation’s housing market, as well as the housing markets of all 50 states, the District of Columbia, and the top 50 metro markets. MiMi combines proprietary Freddie Mac data with current local market data to assess where each single-family housing market is relative to its own long-term stable range by looking at home purchase applications, payment-to-income ratios (changes in home purchasing power based on house prices, mortgage rates and household income), proportion of on-time mortgage payments in each market, and the local employment picture. The four indicators are combined to create a composite MiMi value for each market. Monthly, MiMi uses this data to show, at a glance, where each market stands relative to its own stable range of housing activity. MiMi also indicates how each market is trending, whether it is moving closer to, or further away from, its stable range. A market can fall outside its stable range by being too weak to generate enough demand for a well-balanced housing market or by overheating to an unsustainable level of activity.

New U.S. home sales flat at 481,000 annual pace in January | Bedford Hills Real Estate

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New U.S. homes sold at an annual rate of 481,000 in January, little changed from December’s revised figure, the government said Wednesday. Economists polled by MarketWatch had forecast sales to fall to a seasonally adjusted 467,000 from a revised 482,000 in the final month of 2014.

 

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http://www.marketwatch.com/story/new-us-home-sales-flat-at-481000-annual-pace-in-january-2015-02-25

Adjustable Rate Mortgages: It’s All About Timing | Bedford Corners Real Estate

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Rate shoppers naturally gravitate toward the lowest quotes, but a lower rate can lead to financial trouble if you don’t understand your loan terms. It’s important to know the relationship between rates and fixed terms so you can determine when it’s appropriate to use a shorter loan term instead of a longer one.

A 30-year fixed mortgage rate is higher than a five-year adjustable rate mortgage (ARM) rate because a financial institution is taking more risk to lend you the money for a longer period of time.

The reason for this goes to the root concept of how banks operate. A bank’s business model is to ensure that interest they collect on loans exceeds interest they must pay out on deposits.

Interest that banks must pay you on deposits rises as the economy expands, and falls as the economy contracts over time. It’s easier for banks to manage this interest rate risk in the short term.

For example, interest rates paid on checking and savings deposits are very low because you’re free to withdraw your money any time, while rates paid on certificate of deposit (CD) accounts are slightly higher because the bank requires you to keep those funds deposited for periods of one month to five years.

Because banks know  their expenses on deposits for periods up to five years, they know how to price mortgage loans up to five years. Today, many banks would pay you about 2.25 percent on a five-year CD, and they’d charge you about 3.25 percent for a five-year ARM.

But if you were getting a 30-year fixed loan, they might charge you about 3.875 percent — although these rates fluctuate. This rate is higher in order to compensate a bank for the interest rate risk they’re taking. Rates they must pay on deposits might be much higher during that 30-year period as the economy fluctuates, but your 3.875-percent mortgage rate is guaranteed.

Peg loan term to expected time in the loan

Let’s say you were buying a $300,000 home with 20 percent down, and chose the five-year term at 3.25 percent because the $1,044 payment sounded more affordable than the $1,129 payment on the 30-year fixed at 3.875 percent.

You must be aware that your rate is set for five years, then will adjust each year for 25 years. These adjustments protect the bank from interest rate risk by allowing the loan to move to a market rate when the five-year fixed period expires.

The initial fixed rate of 3.25 percent will change to a market rate comprised of a fluctuating index such as the one-year LIBOR rate (a benchmark for short-term interest rates worldwide) plus a base rate (called a margin) of about 2.25 percent. If the loan adjusted today, it would go down to 2.94 percent because LIBOR remains abnormally low — it was recently .69 percent — as the global economy struggles.

A more normal LIBOR rate is about 3.25 percent. Add that to the ARM margin of 2.25 percent, and your adjusted rate would be more like 6.5 percent, making your new payment in year six jump to $1,447 (which is calculated by amortizing the remaining balance at the five-year mark over the remaining 25 years of the loan).

This is $403 more than the payment on the initial five-year fixed period, and $318 more than the 30-year fixed you could’ve taken. And the loan will adjust to current LIBOR plus 2.25-percent margin once per year from that point forward.

It’s a lot of risk, and raises the question: How do you choose the right balance between the lowest rate and longest fixed term?

The answer is simple: Make sure your rate is fixed for as long as you expect to be in the home or in the loan.

If you know you’ll sell the home or pay off the loan in five years, a five-year ARM is appropriate. Other ARMs you can get have initial fixed periods of three, seven and 10 years, and rates rise as the terms lengthen. If you know you’ll be in the home or the loan longer than 10 years, then your safest budget move is to choose a 15-year fixed or 30-year fixed loan.

 

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http://www.zillow.com/blog/adjustable-rate-mortgage-timing-170590

 

Court rules ListHub must continue to provide listing data to Trulia | Bedford Real Estate

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Realtors, real estate agents and brokers who were worried that their listings were going to disappear from Trulia by the end of the week can breathe a sigh of relief, at least for now.

That’s because the latest round in the contentious battle between Move and the Zillow Group (Z) over Move-ownedListHub’s decision to terminate its listing agreement with Trulia has gone Zillow’s way, with a California judge ruling that ListHub is required to continue to provide listing data to Trulia until at least March 12.

The Zillow Group threatened legal actionagainst Move, which is owned by News Corp (NWS) and operates Realtor.com for the National Association of Realtors, after it informed Trulia last week that it was immediately terminating its listing agreement with Trulia, effective Feb. 26.

But that’s not going to happen now, because Judge Ernest Goldsmith of the San Francisco Superior Court granted Zillow Group’s request for a temporary restraining order and set a court date of March 12, which will keep ListHub listings flowing to Trulia until at least that date.

Trulia was predictably pleased with the court’s decision.

“The court’s order is a win for brokers, agents and the home sellers they represent. Since News Corp announced its decision on Friday to prematurely cut off the listing feed to Trulia, we’ve received an influx of calls from MLSs and brokers who were concerned that they and their clients wouldn’t be able to effectively market their listings ahead of the home shopping season,” Trulia’s president, Paul Levine said in a statement.

“We’re very pleased with this preliminary decision, and hopeful the court will grant us the further time necessary to make this transition in an orderly way,” he continued.

The fight over the ListHub listings is more than a little interesting, considering what Zillow Group CEO Rascoff said last week. “When we announced we were parting ways with News Corp, we were constrained on being reliant on a competitor for listings,” Rascoff said Wednesday morning. He said ListHub sent inferior listings to emphasize that Move’s Realtor.com had “higher quality listings.”

Rascoff also called the separation from Move a “liberating moment.”

Zillow’s previously announced decision to cancel its own listing agreement with ListHub was a surprise to Move, which expected the listing agreement to continue. As it stands now, ListHub listings will disappear from Zillow on April 7.

 

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Court rules ListHub must continue to provide listing data to Trulia

United States S&P Case-Shiller Home Price Index Up 4.3% | Chappaqua Real Estate

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United States S&P Case-Shiller Home Price Index 2000-2015 | Data | Chart

Case Shiller Home Price Index in the United States increased to 173.02 Index Points in December of 2014 from 172.94 Index Points in November of 2014. Case Shiller Home Price Index in the United States averaged 154.45 Index Points from 2000 until 2014, reaching an all time high of 206.52 Index Points in July of 2006 and a record low of 100 Index Points in January of 2000. Case Shiller Home Price Index in the United States is reported by the Standard & Poor’s.

      Forecast

United States S&P Case-Shiller Home Price Index

 

ActualPreviousHighestLowestDatesUnitFrequency
173.02172.94206.52100.002000 – 2014Index PointsMonthly
2000=100; NSA
The S&P/Case-Shiller 20-City Composite Home Price Index measures changes in residential house prices in 20 metropolitan regions in the United States: Atlanta, Boston, Charlotte, Chicago, Cleveland, Dallas, Denver, Detroit, Las Vegas, Los Angeles, Miami, Minneapolis, New York, Phoenix, Portland, San Diego, San Francisco, Seattle, Tampa and Washington D.C. This page provides – United States Case Shiller Home Price Index- actual values, historical data, forecast, chart, statistics, economic calendar and news. Content for – United States S&P Case-Shiller Home Price Index – was last refreshed on Tuesday, February 24, 2015.
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http://www.tradingeconomics.com/united-states/case-shiller-home-price-index

AD&C Loan Volume Grew 2.3% at End of 2014 | Pound Ridge Real Estate

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Posting the seventh consecutive quarter of growth, the volume of residential AD&C loans outstanding expanded 2.3% for the final quarter of 2014.

The tight availability of acquisition, development and construction (AD&C) loans has been a factor holding back a stronger rebound in home construction. However, the stock of residential AD&C loans has been rising over the last two years.

According to data from the FDIC and NAHB analysis, the outstanding stock of 1-4 unit residential AD&C loans made by FDIC-insured institutions rose by $1.158 billion during the fourth quarter of 2014, a quarterly increase of 2.32%.

On a year-over-year basis, the stock of residential AD&C loans is up 17% from the final quarter of 2013.

4q FDIC ADC data

Since the first quarter of 2013, the stock of outstanding home building AD&C loans has grown by 25.5%, an increase of $10.4 billion.

It is worth noting the FDIC data represent only the stock of loans, not changes in the underlying flows, so it is an imperfect data source. Nonetheless, the consistent growth in the outstanding stock of AD&C loans is a positive development. NAHB surveys of builders also suggest improving lending conditions.

However, lending remains much reduced from years past. The current stock of existing residential AD&C loans of $51.2 billion now stands 74.9% lower than the peak level of AD&C lending of $203.8 billion reached during the first quarter of 2008.

The FDIC data reveal that the total decline from peak lending for home building AD&C loans continues to exceed that of other AD&C loans (nonresidential, land development, and multifamily). Such forms of AD&C lending are off a smaller 57% from peak lending. This class of AD&C loans has now registered six quarters of increases (3.76% for the fourth quarter of 2014).

 

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http://eyeonhousing.org/2015/02/adc-loan-growth/

Case-Shiller: “The housing recovery is faltering” | Armonk Real Estate

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Home prices saw a slight increase in nine cities covered by the S&P/Case-Shiller Home Price Indices in December.

Both the 10-City and 20-City Composites saw year-over-year increases in December compared to November.

The 10-City Composite gained 4.3% year-over-year, up from 4.2% in November. The 20-City Composite gained 4.5% year-over-year, compared to a 4.3% increase in November.

The S&P/Case-Shiller U.S. National Home Price Index, which covers all nine U.S. census divisions, recorded a 4.6% annual gain in December 2014 versus 4.7% in November.

“The for-sale housing market made great strides toward ‘normal’ in 2014, as runaway appreciation cooled markedly and negative equity fell significantly. But anyone looking to see how far from truly ‘normal’ the market remains need look no further than the red-hot rental market, and its implications on the broader housing market going forward,” said Zillow Group (Z) Chief Economist Stan Humphries. “Many current renters could likely realize significant monthly savings by buying a home now and taking advantage of terrific affordability driven by low mortgage rates and home prices that remain below peak in most areas.”

 

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http://www.housingwire.com/articles/33042-case-shiller-the-housing-recovery-is-faltering

Here’s the budget of a 27-year-old who owns 2 houses | Mt Kisco Real Estate

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After graduating college in 2009, Brian Maida lived with his parents for about two years in order to save the money to buy his first home.

He bought a second one in 2013.

Maida, 27, lives in New Jersey and works in business development and sales. He says it only took about $14,000 to buy that first place, which he now rents out for supplemental income.

“I was able to refinance that loan within a year and show them that I had 20% equity based on their appraisal, and that lowered my payment by almost 20%,” Maida explains. “You can get pretty good deals on real estate if you look hard and negotiate.”

He bought his second place, where he now lives, in  a short sale with  5% down, and he currently pays private mortgage insurance (PMI).

In fact, Maida devotes the bulk of his monthly budget to his properties, and plans to buy a third property in March of this year. “I liquidated my 401(K) and Roth IRA,” he explains. “I no longer believe in investing in the stock market — I follow it too much. I would rather buy real estate and leverage my money. Right now I own about $250,000 in real estate, and I put in maybe $40,000.”

Below, Maida shares his monthly budget based on his $5,656 monthly income ($4,306 from his salary, $1,350 rental income from his investment property). He budgets according to take-home pay from his base salary, plus paycheck withdrawals like medical insurance but excluding taxes. He chooses to list out the withdrawals in case he ever becomes a contractor in the future. “I don’t even put commission on here, because in my role, I could make $100,000 one year and $200,000 the next,” he adds. “All the commission is extra money I’d save.”

All numbers are rounded to the nearest dollar.

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maida budget

Brian Maida

To simplify the visual, we’ve abbreviated Maida’s primary home, where he lives, as “PH.” We’ve also condensed the costs of his investment property ($1,307) into one category that includes his separate payments for the mortgage, taxes, HOA fee, the landlord/tenant policy, and any other costs.

The “pets” category includes two categories that Maida lists separately for his two dogs and a cat: food/treats/toys/vet ($200) and walking/sitting ($60). His “accident insurance” category includes both his personal death and dismemberment coverage and his enrollment in his employer’s legal plan.

“Vegaprocity” includes costs associated with the vegan website Maida runs on the side. In fact, he provides a downloadable budgeting template on his site.

His monthly costs, which he splits into fixed and variable categories, add up to $4,674 a month, leaving a difference of $982. “If stick to this budget, I save about $12,000 a year,” Maida explains. “My tax return is another approximately $3,000 — that’s $15,000 a year.  Next, I’d like to buy a house for $250,000 to $500,000.”

 

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http://finance.yahoo.com/news/heres-budget-27-old-owns-160000217.html

NAR Reports Existing Sales Disappoint | South Salem Real Estate

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Existing home sales decreased 4.9% in January, and the share of sales for first-time buyers continued to disappoint. The National Association of Realtors (NAR) reported January 2015 total existing home sales at a seasonally adjusted rate of 4.82 million units combined for single-family homes, townhomes, condominiums and co-ops, down from a revised 5.07 million units in December. January existing sales were up 3.2% from the same period a year ago.

Existing Home Sales January 2015

Existing sales from the previous month were down in all four regions, ranging from 2.7% in the Midwest to 7.1% in the West. Year-over-year, existing sales were up in all four regions, ranging from 5.6% in the South to 0.9% in the Midwest.

The first-time buyer share decreased to 26% in January, down from 29% in December and 31% in November. This continuing downward trend follows 2014 during which the annual share of first-time buyers fell to its lowest level in nearly three decades. Reports of easing mortgage standards will help first-time buyers, and a full recovery awaits their return to their typical 40% share.

Total housing inventory increased 0.5% in January to 1.87 million existing homes. At the current sales rate, the January 2015 inventory increased to a 4.7-month supply, up from a 4.4-month supply in December. NAR also reported that in January the typical time on the market was 69 days, up from 66 days in December, and slightly up from 67 days during the previous January. NAR reported that 30% of homes sold in January were on the market less than a month, down from 31% in December and 32% in November.

The distressed sales share January sales remained unchanged from December at 11%, and was down from 15% during the same month a year ago. Distressed sales are defined as foreclosures and short sales sold at deep discounts. January all cash sales increased to 27% of transactions, up from 26% in December and 25% in November, but were down from 33% during the same month a year ago. Individual investors purchased a 17% share in January, unchanged from December, but that share was down from the 20% share last January. Some 67% of January investors paid cash, up from 63% in December and 61% in November. The awaited withdrawal of cash investors will create more opportunity for first-time buyers.

The January median sales price of $199,600 was 6.2% above the previous January, and represented the 35th consecutive month of year-over-year price increases. The median condominium/co-op price dropped for the sixth consecutive month to $198,300 in January, but was up 5.3% from the same period a year ago.

The Pending Home Sales Index decreased 3.7% in December, so the decline in January existing sales was not a surprise. However, it is expected that existing sales will regain their upward momentum during 2015, hopefully supported by the much awaited recovery for first-time buyers.

 

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http://eyeonhousing.org/2015/02/existing-sales-disappoint/