Loan Demand Drops Despite Low Rates

Total mortgage activity – including refinances and home purchases – dropped 4 percent last week on a seasonally adjusted basis even though mortgage rates are near all-time lows, the Mortgage Bankers Association reported Wednesday.

“A strong job market and low rates continue to support home sales,” says Michael Fratantoni, MBA’s chief economist. MBA reports the average on the 30-year-fixed rate mortgage remains near all-time lows, decreasing last week to 3.64 percent (from 3.65 percent the previous week).

Source: “Mortgage Applications Fell 4% Even as Rates Sit Near Record Lows,” CNBC (Aug. 17, 2016)

“Vacation Home Market” Heating Up!

As consumer confidence, the economy, and job market all make gains, more Americans are feeling like they have money to spend on second residences and summer homes. Low interest rates are still a big draw.

Vacation home sales increased 10 percent nationwide in 2012, according to the National Association of REALTORS®. Real estate professionals are also reporting sales have been strong this spring in many vacation home hot spots.

“A lot of buyers who were sitting on the sidelines decided last year was probably a good time to take advantage of buying a vacation home,” says Paul Bishop, NAR’s vice president of research. “They were feeling pretty good about their own financial situation, given the growth in the market and in the economy.”

Source: “Vacation home sales sizzle; rentals book up,” CNBC (May 20, 2013) and “Desire For Vacation Homes Heating Up, Sales Strong,” Investor’s Business Daily (May 16, 2013)

Consumer confidence improves in December!

The Conference Board Consumer Confidence Index improved to 64.5 (1985=100) in December, up from 55.2 in November. The Present Situation Index increased to 46.7 from 38.3, and the Expectations Index rose to 76.4 from 66.4.

Consumers’ assessment of current conditions improved in December. Those stating business conditions are “good” increased to 16.6 percent from 13.9 percent, while those stating business conditions are “bad” declined to 33.9 percent from 38.0 percent.

Consumers’ assessment of the job market also was more positive. Those claiming jobs are “plentiful” increased to 6.7 percent from 5.6 percent, while those claiming jobs are “hard to get” decreased to 41.8 percent from 43 percent.

More information at: http://www.conference-board.org/press/pressdetail.cfm?pressid=4370

More news from the “Sierra Foothills” of El Dorado, Placer, Amador and Sacramento Counties of California at: www.sierraproperties.com or www.dougandbudzeller.com

Renters Spending 5% More Than Home Owners

Rising rents are forcing renters to outspend home owners on housing costs, according to a new study. 

Since 2005, home owners’ housing expenses have climbed from 31.9 percent of their household budget to 33.2 percent. On the other hand, in that same time period, renters’ expenses have jumped from 35.6 percent to 38.4 percent, according to the October CoreLogic U.S. Housing and Mortgage Trends.

In the last 26 years, home owners have increased the amount they spend on household expenses by 12 percent while renters have increased it by 22 percent, according to the study. This is also what we’re finding in the Placerville, California regions.

Earlier this month, Capital Economics economists noted that for the first time in 30 years the median monthly mortgage payment is about the same — or less — than the median rental payment. 

Yet, with the bleak job market, home ownership rates continue to fall in many parts of the country, particularly among younger generations. CoreLogic found in its report that the home ownership rate for the 25-to-34 age group dropped from 51.6 percent in 1980 to 42 percent in 2010. For the 35-to-44 age group, home ownership rates fell from 71.2 percent to 62.3 percent over that period.

 Source: “Renters Outspend Owners on Housing,” RISMedia (Oct. 25, 2011) and Capital Economics