Home Loan Interest Rates Inch Up

After three weeks of mostly staying steady, average mortgage rates rose this week. Rates still remain at multiyear lows, keeping borrowing costs low for those shopping for homes this summer.

“Despite this slight increase in rates, home buyers are taking advantage of the multiyear low rates in droves, which is evident in the consistently higher refinance and purchase application volumes. The improvement in housing demand should provide sufficient momentum for the housing market and economy during the rest of the year,” says Sam Khater, Freddie Mac’s chief economist.

Freddie Mac reported the following national averages for the week ending July 18:

  • 30-year fixed-rate mortgages: averaged 3.81%, with an average 0.6 point, up from last week’s 3.75%. Last year at this time, 30-year rates averaged 4.52%.
  • 15-year fixed-rate mortgages: averaged 3.23%, with an average 0.5 point, rising from last week’s 3.22% average. A year ago, 15-year rates averaged 4%.
Source: Freddie Mac

How Will Housing Fare In the Next Decade?

Housing demand over the next decade will be significantly higher than it is today, predicts Lawrence Yun, the chief economist of the National Association of REALTORS®, in his latest column at Forbes.com. Rising populations and a growth in the job market likely will release a pent-up demand in housing over the next 10 years, he says.

The ages you’ll need to watch for in the housing market over the next decade: those in their 30s and 40s. The population of people in their 30s is expected to grow by 5 million over the next decade, reaching 48 million. Yun says that 12 percent increase likely will lead to more first-time home buyers. Plus, the number of Americans in their 40s will increase by 3 million, and he predicts they’ll be looking to trade up in real estate.

Overall, Yun notes, “Within reasonable parameters of economic growth and interest rate movements, home sales should do well over the next decade, clocking in at around 6 million a year.” The ages we’ll need to watch for in the housing market over the next decade: those in their 30s and 40s. The population of people in their 30s is expected to grow by 5 million over the next decade, reaching 48 million. Or course, every region will vary, what’s predicted for your market?

Source: “Housing Demand Over the Next Decade,” Forbes.com (March 2, 2017)


Does inventory set home prices?


Does a low home sales inventory situation cause home prices to rise?


No, inventory is not a reliable indicator of future home pricing.

It’s a common misconception that low inventory translates directly to higher prices.

An example from the grocery store: when there’s a shortage on sought-after produce like oranges, the price of oranges goes up. But what if the shortage was in a produce that no one really wants, like brussels sprouts? Would the shortage on brussels sprouts really make a difference in prices? Not so much.

Homes are like produce in this sense: pricing always comes back to demand. Inventory (supply) is a side issue and only matters to prices if demand is present to begin with.

California’s current multiple listing service (MLS) market looks more like brussels sprouts than oranges. Homebuyers are skeptical of purchasing today due to the suicidal rise in prices during 2013, caused entirely by speculatorover-activity. Add that lack of confidence in the housing market to the collective lack of income due to the slow jobs recovery and you have a low-demand situation.

Today’s low demand is reflected in a slipping home sales volume, expected to drag home prices down throughout 2014.

Sellers will price their homes at yesterday’s prices until they’re forced to face reality and lower them—the sticky pricing phenomenon. It usually takes several months for sellers to adjust their price expectations. However, adjust downward they will, for homebuyers ultimately set the price of homes, not sellers.

Source: http://journal.firsttuesday.us/   Posted by Carrie B. Reyes


Study Reveals “Fastest Growing Real Estate Clients”

Minorities and immigrants will drive growth in housing demand in coming years, a new study reveals. Within the next 15 years, researchers say they expect this population segment to drive demand for condominiums, smaller starter homes, and first trade-up homes.

Also, this growing demographic is expected to represent a rapidly growing segment of the middle and middle-upper markets for housing, finds a new report, “The State of Hispanic Homeownership,” by the National Association of Hispanic Real Estate Professionals.

“The Latin boom has been forecasted for years but we are now seeing the front edge of it and it has the potential to help the nation’s housing system get back on track if we can create a safe credit environment for new buyers to get into the market,” says Carmen Mercado, NAHREP president.

Hispanics make up the largest minority group in the country and represent a significant portion of the 26 to 46 age group most involved in home sales.

Plus, Hispanics tend to value home ownership more than other demographics. For example, according to a recent study, 57 percent of Hispanics say they consider owning a home a symbol of success compared to 33 percent of all Americans.

Source: “NAHREP Report: Latinos, First-time Homebuyers Are Key to Housing Recovery,” RISMedia (June 20, 2011) 

Other articles relating to the Sacramento and Placerville, California regions at: www.sierraproperties.com


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