Refinance & Lower Loan Payments

Mortgage rates are hovering near three-year lows, and more homeowners may want to start taking advantage. Up to 20 million homeowners could “theoretically” see a 75-point drop in mortgage rates by refinancing, according to a recent analysis from Black Knight.

For homeowners with a credit score of at least 720 and with 20% of equity in their property, they could see savings of nearly $270 per month from lower rates.

Homeowners are starting to respond to lower rates. Refinances are at the highest point since mid-2016 and have doubled since late July. Refinances are up 37% over the past week alone, according to the Mortgage Bankers Association.

Faith in Real Estate, Not Stocks

Real estate has surpassed stocks as Americans’ favorite long-term investment, according to a nationwide Bankrate survey of about 1,000 respondents. Thirty-one percent of survey respondents named real estate as their favorite investment for building wealth that they don’t need access to for a decade or more. That is the best that real estate has performed on Bankrate’s annual survey in the last seven years. In 2018, stocks were the most popular .

Millennials, at 36%, were the most likely age group to call real estate their top long-term investment choice, according to the survey. Other generations also favored real estate, including generation X (31%), baby boomers (30%), and the silent generation (23%). “Millennials are higher on real estate than any other age group, have cooled a bit on cash, and still aren’t keen on the stock market when investing for more than ten years,” says Greg McBride, Bankrate’s chief financial analyst.

Source: “Real Estate Is Back as Americans’ Favorite Long-Term Investment,” Bankrate.com (July 17, 2019)

Shop Around for a Mortgage

More than a third of home buyers say they did not shop around before selecting their mortgage lender, according to new findings from Fannie Mae’s National Housing Survey. That may mean they’re missing out in thousands of dollars in savings.

Real estate professionals, with family and friends, may be among the most influential sources of advice regarding lender selection, notes Doug Duncan, Fannie Mae’s chief economist, in a new column at Fannie Mae.

We recommend a local lender knowledgeable about the area and offers a variety of loans should be one source. The agent needs to help buyers get a lender with the right type of loan that best fits them and the subject home.

Source: Fannie Mae

Mortgage Rates Stay Low

“Mortgage rates have essentially stabilized over the last two months, which reflects the recovery and improvement in the economy from the malaise earlier in the year,” says Sam Khater, Freddie Mac’s chief economist. “Going forward, the combination of low mortgage rates, tight labor market, and high consumer confidence should set up the housing market for continued improvement in home sales heading into late summer and early fall.”

Freddie Mac reports the following national averages for the week ending Aug. 1, 2019:

  • 30-year fixed-rate mortgages: averaged 3.75%, with an average 0.6 point, unchanged from last week’s average. Last year at this time, 30-year rates averaged 4.60%.
  • 15-year fixed-rate mortgages: averaged 3.20%, with an average 0.5 point, rising from last week’s 3.18% average. A year ago, 15-year rates averaged 4.08%.
Source: Freddie Mac

Reversal in Home Sales Slump

Home sales appear poised to reverse their downward trend, as contract signings in each of the four major U.S. regions rose in June, according to the National Association of REALTORS®’ latest Pending Home Sales Index. The West saw the highest increase in contract signings last month, according to NAR’s report.

Contract signings are now up 1.6% year over year, ending a 17-month streak of annual decreases. NAR Chief Economist Lawrence Yun sees the increase as the likely start of a lasting trend for home sales in the coming months. “Job growth is doing well, the stock market is near an all-time high, and home values are consistently increasing,” Yun says. “When you combine that with the incredibly low mortgage rates, it is not surprising to now see two straight months of increases.”

Build More Homes or Get Fined?

In a move to address the housing shortage, some California cities may start to face some stiff penalties if they don’t start building more homes. Under a new bill, cities could face fines up to $600,000 per month if they don’t build more homes for their residents.

A court can find a city or county in violation of state laws that set targets for how much housing a community needs to build for its population needs.

If found in violation, local governments would have a year to comply before the fine kicks in. Following six months of fines, the court could even take over a local government’s authority over its housing plans, according to the bill.

Survey: ‘Senior Housing Demand’

Investors are eyeing senior housing and plan to increase their buying within the sector over the next 12 months, according to the CBRE U.S. Seniors Housing & Care Investor Survey. Sixty-two percent of investors surveyed say they intend to increase the size of their portfolios with elderly living segments over the next year.

“Senior housing demand should remain at relatively healthy levels through 2019, given expected steady economic growth and lower mortgage rates,” says Jeannette Rice, Americas head of multifamily research at CBRE. “Demographic trends are positive for the asset class, with the baby boomers nearing the traditional age for senior housing and nearly 9,000 turning 70 every day this year.”

Source: “Report: Investors Plan to Increase Spending on Senior Housing,” Real Estate Weekly (July 10, 2019)

Rates Stay Near 3-Year Lows

“The recent stabilization mortgage rates reflects modestly improving U.S. economic data and a more accommodative tone from the Federal Reserve to respond to the rising downside economic risk from trade tensions and soft global economic data. On the housing front, the latest weekly purchase applicationdata suggests home buyer demand continues to rise, which is consistent with the slowly improving real estate data from the last two months,” says Sam Khater, Freddie Mac’s chief economist.

Freddie Mac reports the following national averages for the week ending July 11:

  • 30-year fixed-rate mortgages: averaged 3.75%, with an average 0.5 point, unchanged from last week. Last year at this time, 30-year rates averaged 4.53%.
  • 15-year fixed-rate mortgages: averaged 3.22%, with an average 0.5 point, rising from last week’s 3.18% average. A year ago, 15-year rates averaged 4.02%.
Source: Freddie Mac

Gov. Probe Into Creating More ‘Affordable Housing’

President Donald Trump has signed an executive order to ease or, in some cases, eliminate rules that have been blamed for blocking greater construction of affordable housing. Home building is near its lowest level in 60 years, contributing to a nationwide housing shortage that has pushed home prices up and hurting affordability.

Trump announced that a newly created initiative called the White House Council on Eliminating Barriers to Affordable Housing Development will use federal programs to find ways to encourage local governments to allow for more building. The council, which will be chaired by Department of Housing and Urban Development Secretary Ben Carson, will also conduct a study to quantify the effect of regulations on the housing market and economy.

Source: “Trump Administration to Take on Local Housing Barriers,” The Wall Street Journal (June 25, 2019) [Log-in required.]

Supreme Court Rules Landowner Can Sue Over Government Access

The U.S. Supreme Court ruled on Friday that property owners can challenge government access to their land, which some view as a major victory for property rights.

The court’s ruling stemmed from a case involving a Pennsylvania woman, Rose Mary Knick, whose land the town of Scott Township used in 2013 to access an old burial ground. Knick didn’t grant the town permission to come on her property, and she sought damages in court for what she viewed as an invasion of her privacy. Local rules, however, require property owners to allow access to private cemeteries discovered on their land.

Supreme Court justices ruled, in a 5-4 opinion, that the woman can now seek compensation in federal court. “A property owner has a claim for a violation of the Takings Clause as soon as government takes his property for public use without paying for it,” Chief Justice John Roberts wrote in the ruling. “The property owner may sue the government at that time in federal court.”