Freddie Mac today released the results of its Primary Mortgage Market Survey® (PMMS®), showing average fixed mortgage rates down from the previous week. At 3.89 percent, the average 30-year fixed-rate mortgage is at its lowest level since the week of May 30, 2013.
News Facts
30-year fixed-rate mortgage (FRM) averaged 3.89 percent with an average 0.5 point for the week ending December 4, 2014, down from last week when it averaged 3.97 percent. A year ago at this time, the 30-year FRM averaged 4.46 percent.
15-year FRM this week averaged 3.10 percent with an average 0.5 point, down from last week when it averaged 3.17 percent. A year ago at this time, the 15-year FRM averaged 3.47 percent.
5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 2.94 percent this week with an average 0.5 point, down from last week when it averaged 3.01 percent. A year ago, the 5-year ARM averaged 2.99 percent.
1-year Treasury-indexed ARM averaged 2.41 percent this week with an average 0.4 point, down from last from last week when it averaged 2.44 percent. At this time last year, the 1-year ARM averaged 2.59 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 links for the Regional and National Mortgage Rate Details and Definitions. Borrowers may still pay closing costs which are not included in the survey.
Quotes Attributed to Frank Nothaft, vice president and chief economist, Freddie Mac.
“Mortgage rates were down across the board on a week of underwhelming economic releases. New home sales missed consensus expectations by selling at an annual pace of 458,000 units in October and the National Association of Realtors reported that pending home sales dipped in October by 1.1 percent. The ADP’s estimate for payroll growth in November was 208,000 jobs, under expectations of 225,000.”
As the city’s known more nowadays for its inflated, six-zero asks, it might be hard to believe that apartments still exist within its confines under the $300,000 threshold. Okay, they may be small and not quite where all the action’s happening, but that doesn’t have to be a negative. Example: this slim studio on 87th Street between York and First avenues on the Upper East Side is south-facing and looks onto the block’s courtyards. It comes with two closets and a renovated bathroom all for $249,000.
↑ At $299,000, this plain jane of an East Village studio just barely makes the cut. The unit, which has two closets and a separate, windowed kitchen with room for two stools at a breakfast bar, is on the sixth floor of a prewar elevator building on 12th Street between Second and Third avenues. The photos don’t show a bed in the living area, though, so be warned that it looks larger than it probably is! (Which is, according to the listing, 350 square feet.)
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↑ In Chelsea, there’s a townhouse co-op with a fun purple stripe on the wall asking $285K. It’s a walk-up, but there are hardwood floors. The location is central, on West 18th Street near Eighth Avenue, and the two windows have a bright westward view, plus there’s built-in storage above the kitchen and bathroom doors.
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↑ The kitchen in this Park Slope apartment is divided from the living room by a partial wall with a pass-through window that also has shades, making it easier to divide up a small space into even smaller ones. There’s also a separate lofted area for sleeping, though that’s not pictured, with a walk-in closet underneath. The location is hard to beat: half a block away from Prospect Park West on Union Street, right near Grand Army Plaza. Asking price: $299,000.
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↑ This Brighton Beach studio comes with a lovely oceanfront view for a discounted $214,000. Sure, the apartment is small tiny, but packs a punch in its nearly 500 square feet: the kitchen has all new stainless steel appliances (dishwasher included), there’s a terrace, and oceanfront and Manhattan views. And in those steamy summer months, the boardwalk and beach are but steps away.
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↑ In Brooklyn Heights, $299,000 buys this shady studio in classy prewar co-op building The Remsen, off of Remsen and Henry streets. The apartment’s been recently renovated and has new floors, cabinets (installed post-picture taking), countertop, sink and backsplash, as well as two walk-in closets. The building also has a 24-hour doorman. Water, heat, electricity, and gas are all included.
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↑ There’s no floorplan for this seventh-floor prewar co-op on Broadway between 102nd and 103rd Streets, but the listing promises “plenty of closet space, pre-war molding and original hardwood flooring throughout.” The main room of this $275,000 unit does look spacious, and the building (called the Broadmoor) has a nicely furnished shared roof deck with views of the Hudson.
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↑ This studio in a 1939 Art Deco building in Washington Heights has a windowed kitchen and bath, deep closets, 9-foot ceilings, and hardwood floors throughout (although not a whole lot of windows in the living area). The studio is asking$249,000, and is close to neighborhood amenities like Fort Tryon Park. A negative?’ it’ll cost buyers an extra $240 per year to use the building’s gym.
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↑ Near the Midtown Tunnel entrance, Murray Hill offers up this petite pad in a doorman building on 36th Street between Second and Third avenues. It’s basically one big room, but there’s an “entry hall” and a separate galley kitchen, as well as two “large and deep closets.” For $299,000 you’ll get a communal outdoor space on the roof here, too, in the event of claustrophobia.
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↑ At the top of a building that towers over low-lying Forest Hills is this $268,000 studio. The 25th-floor digs have a recently enlarged and updated bathroom, and a renovated kitchen with Moen and Kohler fixtures, a wine refrigerator, and Caeserstone countertops. Gerard Tower has a 24-hour doorman, a seasonal pool, gym, in-building laundry, and underground parking.
now sits at 1.83 adults in 2012, up from 1.75 in 2000.
However, this phenomenon is concentrated in markets where rent has most outpaced income, notably in California and Florida.
For example, the share of Los Angeles adults in doubled up households in 2000 was 41.2%. It now is at 47.9% in 2012. This is compared to places like Columbus, Ohio, that while it did report an increase, it only increased from 19.1% to 25.8%.
“But there is a silver lining behind this data. Like a coiled spring, all of these doubled-up households represent tremendous potential energy for the market. If and when these compressed households begin to unwind and these millions of Americans do start to create their own households, demand will bounce back, possibly even causing household growth to outpace population growth,” Humphries added.
A recent report from TheDemandInstitute found that millennials are finally moving out of their parents’ homes. Although, they are still opting to rent rather than buy their own house.
“One important difference between millennials and young adults in previous decades is the unique financial challenges of home ownership today, resulting from graduating into a weak job market with growing student loan debt,” said Jeremy Burbank, a vice president at The Demand Institute and Nielsen. “Many millennials are open to alternative approaches to housing finance, including single-family rentals and rent/own hybrid contracts such as lease-to-own.”
“There is no magic bullet, but continued home affordability, an increasing supply of both for-rent and for-sale homes and the potential for incomes to grow more quickly as the economy recovers will all help the market to realize this potential,” Humphries added.
Housing is an important source of economic growth. As of the second quarter of 2014, housing’s share of gross domestic product (GDP) was 15.5%, with home building and remodeling yielding 3.1 percentage points of that total.
Housing-related activities contribute to GDP in two basic ways.
The first is through residential fixed investment (RFI). RFI is effectively the measure of the home building and remodeling contribution to GDP. It includes construction of new single-family and multifamily structures, residential remodeling, production of manufactured homes and brokers’ fees. For the second quarter, RFI was 3.1% of the economy.
The RFI component reached a $496 annualized pace during the second quarter. This is the second highest quarterly total for RFI since the middle of 2008.Overall GDP expanded by 4.6% (annualized) for the quarter, with RFI adding 0.27 points of that total.
The second impact of housing on GDP is the measure of housing services, which includes gross rents (including utilities) paid by renters, and owners’ imputed rent (an estimate of how much it would cost to rent owner-occupied units) and utility payments. The inclusion of owners’ imputed rent is necessary from a national income accounting approach because without this measure increases in homeownership would result in declines for GDP. For the second quarter, housing services was 12.4% of the economy.
Historically, RFI has averaged roughly 5% of GDP while housing services have averaged between 12% and 13%, for a combined 17% to 18% of GDP. These shares tend to vary over the business cycle.
Londoners are threatening to leave the capital in their droves as many struggle to pay rocketing housing costs, as wealthy overseas and domestic cash buyers prop up housing prices.
The city could face a “brain drain” as employees look to relocating to more affordable parts of the country, according to research conducted by YouGov for London First.
The not for profit organisation that promotes London to investors said the capital is going to feel the economic consequences of London’s housing shortage with nearly half of those polled vowing to leave the city if prices keep climbing.
The majority of employees (56pc) find it difficult to pay rent or mortgages costs and work in London while three quarters of businesses warned that a lack of supply and costs are a “significant risk to the capital’s economic growth.”
London employees, employers, councillors and more than 1,000 members of the public were all polled on behalf of business group London First and global construction consultancy Turner & Townsend.
[The atrium, which is to be the centerpiece of the hotel. This will be The Living Room, located within the atrium, a lounge by Tom Colicchio. Colicchio will also be offering in-residence dining service for the residents at the condo tower.]
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At long last. The conversion of the beautiful Temple Court building on Beekman Street into a hotel, with a condo tower that will rise behind it, has been in the works for years. Onlookers have been teased and titillated by a video of the beautiful, decrepit space ripe with potential, plus exterior views and one tantalizing interior peek. But today—today a tipster sends along the first extensive look into the interiors of the hotel and condos. Plus one floorplan. And some view shots. And yes, it is impressive.
While you peruse the renders, recall that 68 condominiums will be housed in a 51-story glassy tower adjacent to the 1883-built atrium-filled beauty, which will contain 287 hotel rooms. The condos will start at $1.2 million for the 20 one-bedrooms, $2.95 million for 38 two-bedrooms, and $3.7 million for eight three-bedrooms. Apartments will range from 700 to 3,550 square feet, while the two full-floor penthouses will also have private outdoor space. Penthouse pricing has not yet been announced, so of course, those asks will be higher.
Recent news out of the home finance industry has been rather sombre.
The results of a survey by the Mortgage Bankers Association showed that mortgage applications declined 7.2% in the week ending September 5, 2014 compared to the preceding week, as measured by the Market Composite Index which tracks mortgage loan application volume. On a seasonally adjusted basis this index was down 7.2% versus the previous week, and touched its lowest level since December 2000.
The above chart, courtesy of Mortgage News Daily, plots the Market Composite Index versus the 30 Year Fixed Mortgage. Note that mortgage volume as evidenced by the index has trended inversely to the 30 Year Fixed from 2010 through mid-2013. Subsequently, however, both have tended down as shown by the red arrows. That could be partly explained by the fall in refinance volumes, but other factors are probably at work, judging from a recent survey result from Fannie Mae.
“The August National Housing Survey results lend support to our forecast that 2015 will likely not be a breakout year for housing,” said Doug Duncan, senior vice president and chief economist at Fannie Mae / Federal National Mortgage Assctn Fnni Me (OTCBB:FNMA). “The deterioration in consumer attitudes about the current home buying environment reflects a shift away from record home purchase affordability without enough momentum in consumer personal financial sentiment to compensate for it. To date, this year’s labor market strength has not translated into sufficient income gains to inspire confidence among consumers to purchase a home, even in the current favorable interest rate environment.”
As a result, total home sales during 2014 may actually turn out to be lower than they were in 2013, primarily due to a weak performance the first half of the year.
Vermont is the only state in the nation with housing prices today less than they were 12 months ago. That’s according to data from the Federal Housing Finance Agency, the federal agency that regulates Fannie Mae and Freddie Mac.
We should always take these types of data with several grains of salt. Nonetheless, it is worthwhile to use the FHFA data to see the general course of housing prices in Vermont. And the FHFA numbers show some interesting patterns.
For those old enough to remember, Vermont experienced a housing boom in the mid-and-late 1980s when house prices rose by 75 percent in just six years. By today’s standards, the actual prices people paid for houses look absurd. According to the 1980s Census, Vermonters who owned their own homes told the Census Bureau that their median house price in 1980 was $42,000. In the 1990 Census they reported a median price of $96,000 in 1990. (Today the median price is $216,000.)
Since 1980, the overall price level in the U.S. has nearly tripled, and it’s nearly doubled since 1990, so we need to look at housing prices in inflation-adjusted dollars. Even adjusting for inflation, housing prices rose by 44 percent during the 1983 to 1989 boom, meaning they increased that much faster than the average price of everything in the economy.
The 1980s housing boom was not too different from the more recent Vermont housing boom of the early 2000s. And Vermont did not escape the national housing boom. It did not experience the worst of it, which was in states such as California, Arizona, Florida, and Nevada. But prices in Vermont actually rose faster than the national average between 2000 and 2007.
According to William Sweet, lead author of the report, “as relative sea level increases [in a city], it no longer takes a strong storm or a hurricane to cause flooding.” Which means that if your city is high on the list, road closures, maxed-out storm drains, and the inevitable damage that accompanies a flood will be coming your way (especially if you live on the East Coast).
Scientists examined data from 45 NOAA water level gaugesaround the country and compared that to long-term reports of number of days of nuisance floods to identify which metros are most at risk.
Top 10 U.S. Areas for Nuisance Flooding*
*Averaging more than one flood on average 1957-1963, and for nuisance levels higher than 0.25 meters. “Nuisance level” correlates to the meters above the mean higher high water mark in each location.
1. Annapolis, Md. Nuisance level: 0.29 Average nuisance flood days (1957 – 1963): 3.8 days Average nuisance flood days ( 2007 – 2013): 39.3 days
2. Baltimore, Md. Nuisance level: 0.41 Average nuisance flood days (1957 – 1963): 1.3 days Average nuisance flood days ( 2007 – 2013): 13.1 days
3. Atlantic City, N.J. Nuisance level: 0.43 Average nuisance flood days (1957 – 1963): 3.1 days Average nuisance flood days ( 2007 – 2013): 24.6 days
4. Philadelphia, Pa. Nuisance level: 0.49 Average nuisance flood days (1957 – 1963): 1.6 days Average nuisance flood days ( 2007 – 2013): 12.0 days
5. Sandy Hook, N.J. Nuisance level: 0.45 Average nuisance flood days (1957 – 1963): 3.3 days Average nuisance flood days ( 2007 – 2013): 23.9 days
6. Port Isabel, Texas Nuisance level: 0.34 Average nuisance flood days (1957 – 1963): 2.1 days Average nuisance flood days ( 2007 – 2013): 13.9 days
7. Charleston, S.C. Nuisance level: 0.38 Average nuisance flood days (1957 – 1963): 4.6 days Average nuisance flood days ( 2007 – 2013): 23.3 days
8. Washington, D.C. Nuisance level: 0.31 Average nuisance flood days (1957 – 1963): 6.3 days Average nuisance flood days ( 2007 – 2013): 29.7 days
9. San Francisco, Calif. Nuisance level: 0.35 Average nuisance flood days (1957 – 1963): 2.0 days Average nuisance flood days ( 2007 – 2013): 9.3 days
10. Norfolk, Va. Nuisance level: 0.53 Average nuisance flood days (1957 – 1963): 1.7 days Average nuisance flood days ( 2007 – 2013): 7.3 days
Household debt continued to fall in July as the first mortgage default rate dropped to .88% from .89% last month, according to the S&P/Experian Consumer Credit Default Indices.
This is significantly down from 1.35% in July 2014.
“At just above one percent, default rates remain at historical lows. Mortgage default rates have been trending down while Auto and Bank Card are a bit higher than their historical lows set in April and March,” said David Blitzer, managing director and chairman of the Index Committee for S&P Dow Jones Indices.
The second mortgage default rate slipped to .52%, down from .57% last month and .54% a year ago.
As a whole, the national composite hit 1.01% in July, down one basis point from last month and lowest level in over 10 years.
On the other side, non-housing debt increased slightly in the second quarter.
Auto saw its rate remain unchanged at 0.96%, falling only four basis points above its historical low, while the bank card rate declined 16 basis points to 2.86%.
