Signs Now Point to a ‘Sustainable’ Recovery

Last year, the spring selling season failed to meet market expectations, with sales of new and existing homes in 2014 mostly flat. The dismal selling season last year was most attributed to continued weak consumer confidence, steep home price increases from the previous year, and an uneven economic recovery, The Wall Street Journal reports.

But housing analysts believe 2015 is different. Here are a few reasons why:

  • An improved economy: The economy has added 3.1 million jobs in the past year alone. Low gas prices lately have helped to lift consumer confidence.
  • Mortgage lending is easing: Lenders have shown signs of easing tight borrowing requirements and costs (see FHA Lowers Its Mortgage Costs and 3% Down Payments May Be Game Changer).
  • Boomerang buyers return: Former home owners who had lost their home to foreclosure in the aftermath of the financial crisis have repaired their credit and many are stepping back in to try to qualify to buy a home again.

Source: “Housing Market Sees Hopeful Signs of Spring,” The Wall Street Journal (April 9, 2015)

Prospects of Condominiums Comeback Are High

Condo sales have been on a roller coaster ride in recent years, as the recession hit the sector hard. But is the country ready for a condo revival?

“Condo sales moved sideways several years after the recession before picking up steam again in 2013,” CoreLogic Deputy Chief Economist Sam Khater writes on the company’s blog. “This year, it continues to rebound and currently accounts for 12.3 percent of all sales in 2014.”

As of June 2013, 22 of the 25 top condo markets reported rises in sales compared to prior years. But interest-rate rises in the second half of 2013 caused sales to cool off somewhat, similar to what occurred in the overall market. By June 2014, only 14 of those same markets were showing increases year-over-year, CoreLogic reports.

Housing analysts are optimistic the condo market is poised for a big rebound, particularly since the largest cohort in the U.S. is the 20-to-24 age group.

“This specific age cohort might currently be driving today’s rental market, but they will likely be driving the first-time home buyer and condo markets over the next five to 10 years, driving demand for newly built condos,” Khater notes. “That demand is heavily needed in the market now, given that newly built condos were hit harder in the last housing downturn than newly constructed homes overall.”

Source: “The Long-Term Rising of Condo Sales,” CoreLogic (Sept. 30, 2014)

It’s 2014 — Why Aren’t Mortgage Rates Higher?

Economists have predicted that mortgage rates will rise in 2014, but so far, nothing’s happening. For the past month, mortgage rates have mostly stayed flat or moved lower, with the 30-year fixed-rate mortgage averaging just above 4.5 percent.

Mortgage rates are expected to move higher this year because the Federal Reserve will begin to taper its $85 billion-per-month bond-buying program, which had been helping to keep interest rates low. Mortgage rates started inching up from all-time lows last May when the Fed first hinted that it would do so.

“The simple answer is that the rate hike due to the Fed’s tapering really took effect last May/June, despite the fact that the tapering didn’t begin until December,” says Guy Cecala, of Inside Mortgage Finance. “There was no need to hike rates further.”

But that doesn’t mean housing analysts aren’t still predicting an uptick in mortgage rates this year. “Mortgage rates will rise because interest rates always increase with an improving economy and a strong stock market, which appears to be the current trajectory, though they likely will rise more slowly than some have predicted,” CNBC reports.

Source: “Why Mortgage Rates Aren’t Higher … Yet,” CNBC (Jan. 29, 2014)