Monthly Archives: January 2019

According to the Mortgage Bankers Association’s Weekly Applications Survey, average mortgage rates increased last week from the week before. Rates were up for 30-year fixed-rate mortgages with both conforming and jumbo balances, as well as 15-year fixed-rate loans. Mortgage rates on loans backed by the Federal Housing Administration declined. Joel Kan, MBA’s vice president of industry surveys and forecasts, says the increase caused application demand to dip, though overall interest remains high. “Mortgage applications for purchase and refinances were lower over the past week, as rates nudged higher,” Kan said. “After two weeks of decreases, the purchase index still remained roughly 6 percent above its long-run average, which is good news with spring buying and selling season almost underway. Despite ongoing supply and affordability constraints, the healthy job market and underlying demographic fundamentals both point to gradual purchase growth in the coming months.” In other words, though the market still has some challenges, Americans feel secure financially and are interested in buying. That indicates a busy spring for the housing market. The MBA’s weekly survey has been conducted since 1990 and covers 75 percent of all retail residential mortgage applications. 

Buying a home is mostly a personal decision. Generally, the right time for you to buy has more to do with something happening in your life than it does a shift in market conditions. Maybe it’s a good time to buy because you’ve recently gotten married or have taken a new job in a different part of town. Perhaps you’ve decided to start a family or are approaching retirement. Whatever your reasons, they, most likely, aren’t based on a thorough reading of the housing market and its prospects for a healthy future. But, despite the fact that buyers are going to be more focused on getting a house that fits their lifestyle and has the right number of bedrooms and a good amount of storage, that doesn’t mean they shouldn’t take some time to familiarize themselves with where their local market is heading. Mark Fleming, chief economist at First American, says it can help you make a more informed decision. “When considering the right time to buy or sell a home, an important factor in the decision should be the market’s overall health, which is largely a function of supply and demand,” Fleming says. “Knowing how close the market is to a healthy level of activity can help consumers determine if it is a good time to buy or sell, and what might happen to the market in the future.” More here.

When asked, most Americans indicate that they’d rather stay in their current house once they retire. After all, the comforts of home and a community that you know well and have lived in for many years are hard to replace. But not everyone wants to stay where they are once they’ve retired. And there are no shortage of options for Americans looking for a new living arrangement. For example, they can choose to cash in their equity and downsize into a loft, condo, or apartment. They can also look for a place in a retirement community or even move out of state. But, if you’re feeling adventurous and looking to move far from home, where are the most affordable communities for retirees to move to? Well, according to one recent ranking, a lot of them are in places already popular with older Americans. In fact, nearly half of the top 20 are cities in Florida, including Orlando, Tampa, Ocala, Lakeland, and Jacksonville. Other areas that feature a warmer climate, in addition to their affordability, include Phoenix, San Antonio, and Birmingham, Ala. But all of the most affordable communities aren’t located in sunny, southern locations. The number one most affordable place to retire is Sioux Falls, South Dakota and cities in Indiana, Michigan, Delaware, and Tennessee also make the list. More here.

When prospective home buyers think about whether or not they can afford to buy a home, the first thing they look at is prices. But, after that, mortgage rates run a close second. That’s because they are a significant factor in determining overall affordability and, more specifically, the house you’ll ultimately end up purchasing. For that reason, having an idea about where rates might be heading can help you think about your plans and potential budget. Take Fannie Mae’s most recent Economic and Housing Outlook, for example. The monthly forecast – which projects economic growth and housing market conditions – says that they expect the Federal Reserve to only raise interest rates once in 2019. And, after last year’s rate volatility, that is good news for home buyers, since it would mean little change to current rates. Doug Duncan, Fannie Mae’s chief economist, says steady rates should end up providing some stability in housing conditions this year. “We believe that contained price pressures should afford the Fed sufficient latitude to slow or pause rate hikes this year,” Duncan says. “This will allow the economy to continue growing, albeit at a slower pace, and housing to regain its footing.” More here.

Home buyers hoping for some good news heading into the spring buying season may find it in the Federal Housing Finance Agency’s most recent House Price Index. That’s because, after increasing for the past few years, it looks like home prices are finally starting to slow. In fact, according to the FHFA’s most recent numbers, prices were essentially flat in November from the month before. And, when comparing regional data, some areas may have even seen declines. But while slowing month-over-month increases are a good indication that short-term trends are heading in a more favorable direction, it doesn’t mean prices aren’t still up. In fact, the report shows year-over-year home values were higher than the year before across all nine census divisions – but at varying rates. For example, states in the West South Central division – which includes Texas, Oklahoma, Arkansas, and Louisiana – were up 4.5 percent from one year earlier while Mountain states like Colorado, Arizona, Montana and Utah saw increases closer to 7 percent. All in all, the report is in line with other recent releases suggesting that home prices are no longer moving upward quite as quickly as they were before. More here.

According to the Mortgage Bankers Association’s Weekly Applications Survey, demand for loans to buy homes was 13 percent higher last week than it was during the same week one year ago. The improvement follows a period of declining mortgage rates and two straight weeks of surging application demand. But though the year has been off to a strong start, it cooled a bit last week. Joel Kan, MBA’s associate vice president of economic and industry forecasting, says activity slowed but is still at healthy levels. “Mortgage application activity cooled off last week after two consecutive weeks of sizeable increases,” Kan said. “Both purchase and refinance applications saw declines but remained at healthy levels, with the purchase index remaining close to a nine-year high, and the refinance index hovering near its highest level since last spring.” Also in the report, average mortgage rates were up for 30-year fixed-rate loans with both conforming and jumbo balances, as well as loans backed by the Federal Housing Administration. The increase interrupts a downward trend that began at the end of last year. The MBA’s weekly survey has been conducted since 1990 and covers 75 percent of all retail residential mortgage applications. 

Searching for a home to buy means making a major financial decision, while at the same time choosing a place to spend the next several years of your life. In other words, it’s not the type of thing you want to rush. However, in a competitive market, home buyers sometimes don’t have the luxury of thinking through their options. A good house is likely to attract a lot of attention and, if you want it, you have to make your offer fast. That has been the case recently, as there have been fewer homes available to buy and a high level of buyer demand. In short, homes have been selling quickly. But, according to new numbers from the National Association of Realtors, that may be changing. In fact, the typical home was on the market for 46 days in December, which is up from 42 days in November and 40 days last year at the same time. And if that doesn’t seem like a big improvement, consider that in August of last year the typical home sold in just 29 days. Lawrence Yun, NAR’s chief economist, says inventory has been improving and it’s helping buyers. “Several consecutive months of rising inventory is a positive development for consumers and could lead to slower home price appreciation,” Yun said. “But there is still a lack of adequate inventory on the lower-priced points and too many in upper-priced points.” 

Millennial home buyers face some well-documented challenges. Higher home prices, too few starter homes for sale, and student loan debt are near the top of the list. Add to that having to save for a down payment while paying rent and it can seem like an uphill battle. But younger Americans want to buy and are showing a willingness to get creative in order to make it happen. For example, a new survey finds nearly 70 percent of millennials, who say they’d like to become homeowners soon, would consider buying a home that needs major repairs. And since finding an affordable house in a good neighborhood with quality schools and a short commute to work isn’t always easy, taking on a home improvement project in order to get one may not seem like that big of a tradeoff. And it isn’t, especially if you can do some of the work yourself. But, if this strategy appeals to you, be careful. Home repairs can get costly and even more so if you don’t have the expertise and experience to handle the job. More here.

Builders build the homes we buy and live in but they also serve another important purpose. They are a good barometer for where the real estate market is heading. After all, it’s their business to determine whether or not people are buying homes. So when builders are confident, there’s likely a good reason. According to the National Association of Home Builders’ most recent Housing Market Index, the reason this month is mortgage rates. The NAHB’s index measures builder confidence on a scale where any number above 50 indicates more builders view conditions as good than poor. In January, it increased two points to 58. Randy Noel, NAHB’s chairman, says it’s because there’s been a decline in mortgage rates over the past several weeks. “The gradual decline in mortgage rates in recent weeks helped to sustain builder sentiment,” Noel said. “Low unemployment, solid job growth, and favorable demographics should support housing demand in the coming months.” In other words, builders expect buyer demand to remain high going into this spring’s sales season. 

Spring is the busiest season for home buyers. So, naturally, there’s a lot of analysis of buying conditions as it approaches. Things like mortgage rates, the economy, prices, for-sale inventory, and buyer demand can all be used to get a feel for how busy or slow the season will be. One early sign came with this week’s Applications Survey from the Mortgage Bankers Association. The survey measures mortgage rate movement and also demand for refinance and home purchase loans. The most recent results show a significant surge in demand over the previous week. In fact, total mortgage loan demand was up 13.5 percent from one week earlier and requests for loans to buy homes was 11 percent higher than at the same time last year. Mike Fratantoni, MBA’s senior vice president and chief economist, said the spike might be a hopeful sign. “Uncertainty regarding the government shutdown, slowing global growth, Brexit, a more patient Fed, and a volatile stock market continued to keep rates from increasing,” Fratantoni said. “The spring home buying season is almost upon us, and if rates stay lower, inventory continues to grow, and the job market maintains its strength, we do expect to see a solid spring market.”