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Mortgage Rates Sink to a ‘New Low for 2014′

August 22 2014

Despite predictions that mortgage rates were to inch up in the second half of this year, fixed-rate mortgages continue to tumble.

Borrowing costs moved lower this week, as the 30-year fixed-rate mortgage dipped to a 4.10 percent average, Freddie Mac reports in its weekly mortgage market survey. The 30-year fixed-rate mortgages previous low average for the year was 4.12 percent.

Freddie Mac reports the following average mortgage rates for the week ending Aug. 21:

  • 30-year fixed-rate mortgages: averaged 4.10 percent, with an average 0.5 point, dropping from last week’s 4.12 percent. Last year at this time, 30-year rates averaged 4.58 percent.
  • 15-year fixed-rate mortgages: averaged 3.23 percent, with an average 0.6 point, dropping from last week’s 3.24 percent average. A year ago, 15-year rates averaged 3.60 percent.
  • 5-year hybrid adjustable-rate mortgages: averaged 2.95 percent, with an average 0.5 point, dropping from last week’s 2.97 percent average. Last year at this time, 5-year ARMs averaged 3.21 percent.

Source: Freddie Mac

Refis Tick Up Loan Demand in Latest Week

August 20 2014

A drop in mortgage rates renew home owners’ interest in refinancing their mortgage.

The rise in refinancing applications helped to give overall loan demand a boost for the week ending Aug. 15, the Mortgage Bankers Association reports in its weekly mortgage market survey, which reflects 75 percent of the residential mortgage market.

Mortgage application activity, including both loans for refinancings and home purchases, increased 1.4 percent during the week.

Broken out, refinancing applications increased 2.7 percent, while loans for home purchases, viewed as a leading indicator of future home sales, fell 0.4 percent.

The 30-year fixed-rate mortgage averaged 4.29 percent during the week, down 6 basis points from the prior week, the MBA reports.

Source: “U.S. Mortgage Applications Rise in Latest Week: MBA,” Reuters (Aug. 20, 2014)

‘City Design’ Linked to Residents’ Health

August 17 2014

Older cities are generally healthier than many newer cities because compact street networks promote more walking and biking, according to researchers at the University of Colorado Denver and the University of Connecticut.

The study’s co-authors looked at 24 medium-sized California cities with populations between 30,000 and just over 100,000, examining street network density, connectivity, and configuration. They studied how street design correlates with obesity, diabetes, high blood pressure, heart disease, and asthma rates collected by the California Health Interview Survey since 2003.

The report concluded that more intersections in a city leads to a reduction in obesity at the neighborhood level, as well as a reduction of obesity, diabetes, high blood pressure, and heart disease at the city level. The study also found a correlation between wider streets with more lanes and increased obesity and diabetes rates.

“Over the course of the 20th century, we did a great job of engineering utilitarian active transportation out of our daily lives,” said Wesley Marshall, study co-author and assistant professor of engineering at CU Denver. “While they were well-intentioned design decisions, they effectively forced people to make an effort to seek out exercise and we are now seeing the health implications of these designs.”

“Taken together, these findings suggest a need to radically re-think how we design and build the streets and street networks that form the backbone of our cities, towns, and villages,” said Norman Garrick, co-author and associate professor of engineering at the University of Connecticut. “This research is one more in a long line that demonstrates the myriad advantages of fostering walkable places.”

Source: “Study Shows Links Between City Design And Health,” University of Colorado Denver (Aug. 11, 2014)

Is the Entry-Level Home Vanishing?

August 13 2014

For-sale inventories may be at nearly a two-year high, but first-time home buyers are still finding themselves shut out of the housing market, being outbid and still not finding enough choices in their price range, Reuters reports.

A decline among inventories for entry-level homes has worsened during the past year as discount foreclosures have faded and investors have continued to buy up low-priced homes and turn them into rentals through all-cash deals. Also hampering the inventory picture, lower-priced properties are more likely to have home owners with underwater mortgages, preventing them from moving on and putting their homes on the market, Reuters reports.

“It’s bad news for people looking for a starter home that all the choices are disappearing,” says Lawrence Yun, chief economist at the National Association of REALTORS®. “People shouldn’t expect inventory to show up on the low end. It’s not available.”

The number of homes for sale below $198,000, considered the bottom third of the market, dropped 17 percent in June compared to a year earlier, according to an analysis by the real estate brokerage Redfin, which tracked 31 of the largest U.S. metro markets. On the other hand, inventories rose 3 percent in the middle of the market and soared 15 percent at the top, according to the analysis.

First-time home buyers are often drawn to the lower-priced homes, and their dwindling numbers in recent years have reflected some of the struggles in finding an affordable home. First-time home buyers accounted for 28 percent of all sales of previously owned homes in June, which is down from a historical average of about 40 percent, according to NAR research.

Source: “First-Time Buyers Shut Out of Expanding U.S. Home Supply,” Bloomberg News Online (Aug. 12, 2014)

 

 

2014 Expected to Have ‘Strong Finish’

August 9 2014

Despite hitting a soft spot in the first quarter, home sales are expected to make a strong showing in the second half of 2014, NAR’s Chief Economist Lawrence Yun told brokers at the Broker Summit in Atlanta Thursday.

Yun called the past few years of economic recovery “difficult but meaningful.” Unit sales are currently down 5 percent year-over-year, but he expects 2014 to end up close to last year’s totals at a little more than 5 million units sold.

Looking at the economy is a good way to see what will happen in housing, Yun says. Gross domestic product (GDP) was negative in the first quarter, but bounced back in the second. Although Yun would like to see consistent economic growth above 3 percent – it’s currently around 2 percent. “It’s moving in the right direction,” he says. “We’ve recovered all the jobs lost in downturn and new jobs are being created.”

Declining unemployment is a good sign for housing. However,more people are claiming disability, and rarely do they return to the workforce, Yun says. What’s more, the unemployment statistics are not considering Americans who aren’t collecting unemployment and who have essentially dropped out of the labor force.

Another piece of good news for real estate is that inventory is heading up nationwide, Yun says. Thetotal housing inventory at the end of June rose 2.2 percent to 2.30 million existing homes for sale. Research shows that consumers feel more confortable visiting 10 to 15 homes before making a purchase decision, Yun says, and as inventories come back, so will buyer confidence and sales.

Source: Erica Christoffer, REALTOR® Magazine

Moving from ‘Renting to Homeownership’ could get easier!

August 7 2014

Adding in rental history to a credit score could make all the difference for potential homeowners, according to an article in Businessweek.

Experian published an analysis on almost 20,000 people in government-subsidized housing who pay their monthly rent on time. The survey found that before adding in rental history, 11% of the same had no credit file at all, which makes it extremely hard to get loans. However, once the rental history was included, 59% of that group had prime credit scores, and another 38% had “nonprime” scores, while only 3% were considered subprime.

As reported back in June, mortgage lenders might start considering rent payment history in credit scores. In the current system, years of monthly payments to landlords do not show up on credit-bureau files.

Two of the national bureaus — Experian and TransUnion— have begun incorporating verified rental-payment data into credit files where it can be included in the computation of consumers’ scores when they apply for a mortgage.

Source: Businessweek

$22B Still Unclaimed in Government Mortgage Relief

July 30 2014

Nearly $22 billion remains available to help struggling home owners reduce their monthly mortgage payments and avoid foreclosure through the government’s Making Home Affordable program, according to a quarterly report by the special inspector general for the Troubled Asset Relief Program. TARP has only spent $12.8 billion to date of the $45.6 billion in funds it’s been allocated for housing programs. An additional $3.4 billion is still available for the Hardest Hit Funds Program as well.

The “Treasury should improve coordination between these programs so that they work together as seamlessly as possible to provide effective, sustainable mortgage relief to as many struggling home owners as possible,” the report states.

HAMP has suffered from low participation. Only 1 in 6 home owners who have applied for HAMP have received a permanent loan modification, according to the report. The program has had a high redefaulting rate. To date, 389,222 home owners who have participated in HAMP have not been able to keep up with their new modified mortgage payments. Twenty-nine percent of home owners who qualified for HAMP have had to drop out of the program.

Many home owners are soon set for an increase in their rate. After five years, the rate on HAMP loans rises 1 percent until reaching its previous rate prior to the loan modification.

Source: “$22B in Government Mortgage Relief Still Left for Struggling Homeowners,” Housingwire (July 30, 2014)

Mortgage Rates Hover Near Yearly Lows

July 25 2014

Fixed-rate mortgages remained mostly unchanged this week, with borrowing costs just slightly above their lows for 2014, Freddie Mac reports in its weekly market survey.

Freddie Mac reports the following mortgage rates for the week ending July 24:

  • 30-year fixed-rate mortgages: averaged 4.13 percent, with an average 0.6 point, unchanged from last week. Last year at this time, 30-year rates averaged 4.31 percent.
  • 15-year fixed-rate mortgages: averaged 3.26 percent, with an average 0.6 point, rising from last week’s 3.23 percent average. A year ago, 15-year rates averaged 3.39 percent.
  • 5-year hybrid adjustable-rate mortgages: averaged 2.99 percent, with an average 0.5 point, rising from last week’s 2.97 percent average. Last year at this time, 5-year ARMs averaged 3.16 percent.

Source: Freddie Mac

3 Challenges Still Facing the Housing Market

July 23 2014

Existing-home sales gained momentum in June, reaching an annual pace of 5 million sales for the first time since October 2013, according to the National Association of REALTORS®’ latest housing report. Rising inventories also are pushing the overall supply of homes for sale toward a more balanced market, with unsold inventories 6.5 percent higher than a year ago, NAR notes.

“Inventories are at their highest level in over a year and price gains have slowed to much more welcoming levels in many parts of the country,” says Lawrence Yun, NAR’s chief economist. “This bodes well for rising home sales in the upcoming months as consumers are provided with more choices.”

Still, the market is facing several headwinds that continue to subdue a more robust recovery. NAR noted three in its most recent housing report:

1. Sluggish new-home construction: While overall housing inventories showed improvement in June, inventory problems continue to weigh on the market and could become more problematic if new-home construction doesn’t increase in more markets, NAR notes. “New-home construction needs to rise by at least 50 percent for a complete return to a balanced market because supply shortages — particularly in the West — are still putting upward pressure on prices,” Yun notes.

2. Stagnant wage growth: Yun also noted that stagnant wage growth is holding back what should be a stronger pace of sales. “Hiring has been a bright spot in the economy this year, adding an average of 230,000 jobs each month,” Yun notes. “However, the lack of wage increases is leaving a large pool of potential home buyers on the sidelines who otherwise would be taking advantage of low interest rates. Income growth below price appreciation will hurt affordability.”

3. Dwindling first-time home buyers: The percentage of first-time buyers continues to be low by historical standards. First-time home buyers made up 28 percent of the market in June, down from a typical 40 percent of the market historically.

Source: National Association of REALTORS®

 

Multigenerational Households at Record High

July 21 2014

A record 57 million Americans – or 18.1 percent of the U.S. population – lived in multigenerational households in 2012, according to an analysis by the Pew Research Center of the most recent data available measuring multigenerational households. The rate is up from 17.8 percent in 2011 and has risen dramatically. In 1980, for example, only 12.1 percent of the population lived in multi-generational households.

The trend is mostly being driven by young adults who are living at home, the report notes.

“After three decades of steady but measured growth, the arrangement of having multiple generations together under one roof spiked during the Great Recession of 2007-2009 and has kept on growing in the post-recession period, albeit at a slower pace,” according to Pew’s analysis.

For its analysis, Pew defined multigenerational households as having at least two adult generations, such as a parent and an adult child age 25 or older.

Nearly a quarter of young adults – or 23.6 percent – who are between the ages of 25 to 34 lived in a multigenerational home in 2012. That marks more than double the 11 percent in 1980, according to the Pew analysis. Declining employment and wages of young adults is undercutting their ability to live independently. The generation is also marrying at older rates, staying in school longer, and more ethnically diverse.

Source: “In Post-Recession Era, Young Adults Drive Continuing Rise in Multi-Generational Living,” Pew Research Center (July 17, 2014) and “All in the Family Home: Record 57 Million Americans Living in Multi-Generational Households,” The Wall Street Journal (July 17, 2014)