Citadel NYC Archives

Credit Score Data A Reminder To Keep Good Habits

Keeping good financial habits is important, especially if you’re expecting to buy a house any time soon. That’s because, your credit history and score will be among the tools your lender uses to determine whether or not you’re qualified for a mortgage. In other words, making sure your credit score is as good as it can be should be a top priority for prospective home buyers. But, though that’s true, last year saw a drop in average credit scores among borrowers. In fact, numbers from Ellie Mae show borrowers’ average FICO score dropped from 728 to 722 year-over-year in November. The good news is that that’s a significant improvement over where it was a few years ago. It’s also, however, a reminder to practice good financial habits, pay your bills on time, and check your credit history for any fixable errors. Joe Tyrell, Ellie Mae’s president of corporate strategy, says the news is encouraging, despite the drop. “With the average credit score dipping, lenders are extending credit to borrowers who may have had no previous access to the housing market,” Tyrell said. “While these scores are still significantly above levels seen a few years ago, it is encouraging to see increased accessibility especially as the millennial population continues to pursue home ownership.” More here.

Mortgage Rates Mostly Steady To End The Year

According to the Mortgage Bankers Association’s Weekly Applications Survey, average mortgage rates were fairly steady at the end of 2017. In fact, 30-year fixed-rate loans with conforming balances were unchanged during the last week of the year – while jumbo loans, loans backed by the Federal Housing Administration, and 15-year mortgages all saw minor movement. All told, rates were fairly steady throughout the year, though they ended December at their highest point in months. Joel Kan, an MBA economist, told CNBC some of the bump was due to increased economic optimism. “With the passage of the tax reform bill, there were increased expectations of stronger economic growth, which pushed rates higher,” Kan said. But despite the week-to-week fluctuations, mortgage rates stayed within a narrow range throughout the year, and expectations are that they should stay relatively calm this year as well. The MBA’s weekly survey has been conducted since 1990 and covers 75 percent of all retail residential mortgage applications. More here.

Homeownership Seen As Path To Financial Security

There’s no shortage of opinions, these days. Which means, you’ve probably heard varying viewpoints on whether or not buying a house is really a smart investment. Especially following the housing crash, it became more popular to say that buying a home may not, in fact, be a better financial choice than renting. But despite the debate, recent research shows that the vast majority of Americans still see homeownership as a path to increased financial security. For example, a recent survey from NeighborWorks found 81 percent of all adults and 71 percent of millennials believe owning a home is good for financial stability. Among the reasons this remains true is the fact that, unlike rent, your monthly mortgage payment is actually buying you an increasing percentage of ownership in your home. As you build up a larger share of ownership and your equity increases, so does your net worth – making homeownership an excellent way of investing in something long term while also enjoying the immediate benefits. More here.

The One Thing Home Buyers Won’t Compromise On

Buying a home means making a lot of choices. You’re going to have to make decisions on everything from how far you’re willing to drive to work and how much storage space you’ll need for all your stuff. The best way to handle the long list of choices you’re going to have to sort through is by breaking into things you can live without and things you have to have. Deciding in advance where you will and won’t compromise will make the buying process easier once you’re fully submerged. So what are the things home buyers are least willing to give up on? Well, according to one recent survey, most buyers say they want a house that doesn’t require a lot of renovations or upgrades. In fact, nearly one third of respondents said this was non-negotiable. And that makes sense. After all, who wants to go through the ups-and-downs of the home buying process only to move into a house that requires months worth of work before you can enjoy it? Other things buyers said they wouldn’t compromise on included a bigger home, outdoor space, a great neighborhood, and a shorter commute. More here.

The Total Value Of All The Homes In the US

Perhaps you’ve never thought about how much all the homes in the country would cost if their values were totaled. But, according to recently released data from Zillow, that number is now $31.8 trillion – and that’s up $2 trillion from the year before. Zillow senior economist Aaron Terrazas says the national housing stock hit record heights in 2017. “Strong demand from buyers and the ongoing inventory shortage keep pushing values higher, especially in some of the nation’s booming coastal markets,” Terrazas said. In fact, the New York and Los Angeles markets alone account for more than 8 percent of the value of all U.S. housing. According to the report, each are now worth more than $2.5 trillion. Among the cities seeing the most rapid growth, Columbus led the way, with a 15.1 percent increase – though San Jose, Dallas, Seattle, Tampa, Las Vegas, and Charlotte also grew by more than 10 percent over the past year. More here.

Strengthening Market Raises Questions For 2018

Recent real estate data has revealed a strengthening housing market. In fact, both new and existing home sales were better than expected in November and new estimates from the National Association of Realtors show contract signings up as well. The NAR’s Pending Home Sales Index – which measures contracts to buy homes rather than closings – was up only slightly in November but hit its highest reading since June. Lawrence Yun, NAR’s chief economist, said the housing market is getting stronger. “The housing market is closing the year on a stronger note than earlier this summer, backed by solid job creation and an economy that has kicked into a higher gear,” Yun said. However, Yun also cautions that, though there is growing demand for homes, low inventory levels remain a big question for next year’s home buyers. If more homes become available for sale, next year’s market could grow even stronger – as more homes for sale will help improve affordability conditions for buyers.

Year End Recap Finds 2017 Best In A Decade

Reading real-estate news can sometimes give you the impression that there are nothing but challenges in today’s market. Inventory shortages and rising prices dominate the headlines and can make it appear as though prospective home buyers are in a tough spot. And yet, Freddie Mac’s year-end recap says the housing market just had its best year in a decade. In fact, the report highlights a number of positive developments that have helped propel the market. Among them, a stronger economy and job growth lead the way. Americans are feeling more confident in their financial situation, which makes them more likely to consider buying a house. Renewed confidence, along with lower-than-normal mortgage rates, has helped balance out some of the affordability challenges that exist in certain markets. Overall, consistent buyer demand and rising optimism have led to a high level of buyer demand. Freddie Mac predicts this will help accelerate new home construction, which may moderate price increases next year. In short, today’s market offers potential buyers some reason for encouragement. More here.

Skyrocketing New Home Sales Beat Expectations

New home sales are an important barometer for the housing market for a number of reasons. For one, the more new homes that sell, the more new homes builders will build. And, as more new homes get added to the number of homes for sale, home prices will begin to moderate, as there are more homes for buyers to choose from. In other words, new home sales affect anyone buying or selling a home, regardless of whether they’re specifically interested in a newly built home. Because of that, news that new home sales rose 17.5 percent in November is encouraging for potential buyers and sellers interested in getting into the market in the coming months. That’s because strained affordability conditions will be helped by an increase in the number of new homes being sold and, even more importantly, the number of new homes that are built in the coming year. The monthly improvement also far exceeded economists’ expectations. In fact, economists polled by Reuters had predicted sales would fall 4.7 percent. More here.

Home Sales Reach Strongest Pace Since 2006

Sales of previously owned homes rose for the third straight month in November, according to new numbers from the National Association of Realtors. The improvement put home sales at their strongest pace since 2006 and 3.8 percent above where they were at this time last year. Lawrence Yun, NAR’s chief economist, says the economy is fueling increased interest in buying a home. “Faster economic growth in recent quarters, the booming stock market, and continuous job gains are fueling substantial demand for buying a home as 2017 comes to an end,” Yun said. However, despite the overall improvement, there are still a lower-than-usual number of first-time home buyers active in the market. This is primarily due to the fact that there are more homes available for sale at the high end of the market than in the more affordable price ranges popular with new buyers. Yun says new construction is the answer. “The increase in homebuilder optimism must translate to significantly more new construction in 2018 to help ease these acute inventory shortages,” he said.

Mortgage Applications Stall Despite Rate Drop

According to the Mortgage Bankers Association’s Weekly Applications Survey, average mortgage rates fell last week for 30-year fixed-rate mortgages, loans backed by the Federal Housing Administration, and 15-year fixed-rate loans. Rates for jumbo loans increased from the previous week. Despite favorable rates, however, total demand for mortgage applications was down nearly five percent. Joel Kan, an MBA economist, told CNBC there are a couple of reasons application demand may have slowed – including news of the tax plan moving through congress. “The seasonal slowdown is certainly a key factor, but it could be that some buyers wanted to see the fine print of the bill before making a commitment, and that led to a pullback,” Kan said. Whatever the case, demand for loans to buy homes was down six percent from the week before, though it remains one percent higher than it was during the same week last year. The MBA’s weekly survey has been conducted since 1990 and covers 75 percent of all retail residential mortgage applications. More here.