Why Home Buyers Need to Hurry

While there have been signs recently that the market may be shifting toward the favor of home buyers, prices are still on the rise in many areas around the country. The median sales price in July was $230,411, up 5.8 percent year over year.

The typical mortgage payment jumped 13.1 percent over that same one-year period, due to a nearly 0.6 percentage point increase in mortgage rates, according to new data from CoreLogic, a real estate research firm.

Rates are expected to increase by about 0.43 percentage points between July 2018 and July 2019. Housing forecasters predict median home sale prices to continue to rise by 1.8 percent in real terms over that same period.

With these projections, CoreLogic researchers predict the inflation-adjusted typical monthly mortgage payment to rise from $937 in July 2018 to $1,003 by July 2019.

Source: “Homebuyers’ ‘Typical Mortgage Payment’ Rising at Twice the Rate of Prices,” CoreLogic Insights Blog (Oct. 17, 2018)

Some Relief With Mortgage Rates

Following weeks of gradual increases, the 30-year fixed-rate mortgage dipped slightly this week, offering a slight window of opportunity at lower borrowing costs to some would-be buyers.

“While the housing market has clearly softened in reaction to the rise in mortgage rates, the economy and consumer sentiment remains very robust and that will sustain purchase demand, particularly in affordable markets and neighborhoods,” says Sam Khater, Freddie Mac’s chief economist.

Freddie Mac reports these rates for the week ending Oct. 18:

  • 30-year fixed-rate mortgages: averaged 4.85 percent, with an average 0.5 point, dropping from last week’s 4.90 percent average. Last year at this time, 30-year rates averaged 3.88 percent.
  • 15-year fixed-rate mortgages: averaged 4.26 percent, with an average 0.4 point, falling from last week’s 4.29 percent average. A year ago, averaged 3.19 percent.
Source: Freddie Mac

Zero-Down Home Loan Program

A new effort is underway to raise the low rate of home ownership among under served groups of home buyers. The Neighborhood Assistance Corp. of America is hosting several events across the country, helping borrowers with low credit scores to apply for 15- or 30-year mortgages with cheaper interest rates.

NACA CEO Bruce Marks told CNBC. “There have been zero foreclosures among the loans that we’ve originated in the past six years.”

Borrowers are required to go through an education session about the program, as well as counseling for budget planning to make sure they can afford a mortgage payment. They also must still submit all necessary documents, such as income statements amd phone bills. The program serves only those who are buying a primary residence, not an investment property.

Mortgage Rate Update!

“Rising rates paired with high and escalating home prices is putting downward pressure on purchase demand,” says Sam Khater, Freddie Mac’s chief economist. “While the monthly payment remains affordable due to the still low mortgage rate environment, the primary hurdle for many borrowers is the down payment.”

Freddie Mac reports these national averages for the week ending Oct. 11:

  • 30-year fixed-rate mortgages: averaged 4.90 percent, with an average 0.5 point, rising from last week’s 4.71 percent average. Last year at this time, 30-year rates averaged 3.91 percent.
  • 15-year fixed-rate mortgages: averaged 4.29 percent, with an average 0.4 point, rising from last week’s 4.15 percent average. A year ago, 15-year rates averaged 3.21 percent.
Source: Freddie Mac

Foreclosures Sink to 13-Year Low

Foreclosures are disappearing from most community listings. Foreclosure filings—default notices, scheduled auctions, or bank repossessions—fell 6 percent in the third quarter, dropping to the lowest level since the fourth quarter of 2005. Foreclosure activity in the third quarter is now 36 percent below the pre-recession average of 278,912 properties with foreclosure filings, according to ATTOM Data Solutions’ latest report.

Properties that were foreclosed in the third quarter are seeing a slightly shorter process. The foreclosure process is averaging 713 days, which is down from 899 days a year ago. The states with the longest average timelines for foreclosed homes are Hawaii (1,491 days); Indiana (1,295 days); Florida (1,177 days); Utah (1,170 days); New Jersey (1,137 days); and New York (1,092 days).

Buyers Should ‘Ask After a Home Inspection’

After an inspector has finished a home report, buyers may feel overwhelmed by any flaws that might have been found. That’s why it’s important they take the opportunity to learn more so that they can move forward confidently in the transaction.

A recent article at realtor.com® recommends home buyers ask their inspector clarifying questions like: “I don’t understand this; what does it mean?” or “Is this a major or minor problem?” and “Do I need to call in another expert for a follow-up?”

If the inspector identifies a potentially major problem, consumers will want to follow up whether they should call an additional expert in to investigate further. For example, consumers may need to bring in an electrician to take a closer look at potential electrical issues that were flagged or a roofer if a roofing problem is suspected. Those specialists can then give an idea of the cost to fix it, which the real estate agent can take to the seller to request a concession, if the seller doesn’t want to fix it prior to the sale.

Source: “Home Inspection’s Complete? Here’s What You Must Ask Afterward,” realtor.com® (Oct. 9, 2018)

Home Loan Interest Rates ‘Drop Slightly’

Borrowers saw a slight cool down in mortgage rates this week following last week’s seven-year high. The 30-year fixed-rate mortgage dipped for the first time after five consecutive weeks of increases.

“The strength in the economy has failed to translate to gains in the housing market as higher mortgage rates have contributed to the decrease in home purchase applications, which are down from a year ago,” says Sam Khater, Freddie Mac’s chief economist. “With mortgage rates expected to track higher, it’s going to be a challenge for the housing market to regain momentum.”

Freddie Mac reports the following national averages for the week ending Oct. 4:

  • 30-year fixed-rate mortgages: averaged 4.71 percent, with an average 0.4 point, falling slightly from last week’s 4.72 percent average. Last year at this time, 30-year rates averaged 3.85 percent.
  • 15-year fixed-rate mortgages: averaged 4.15 percent, with an average 0.4 point, decreasing from last week’s 4.16 percent average. A year ago, 15-year rates averaged 3.15 percent.
Source: Freddie Mac

Mortgage Rates Surge to 7-Year High

Mortgage rates surged to their highest averages since 2011 following the Federal Reserve’s announcement Wednesday that it is raising its benchmark interest rate by a quarter point. The 30-year fixed-rate mortgage jumped to 4.72 percent, up from 4.65 percent last week.

“The robust economy, rising Treasury yields, and the anticipation of more short-term rate hikes caused mortgage rates to move up,” says Freddie Mac Chief Economist Sam Khater. “Even with these higher borrowing costs, it’s encouraging to see that prospective buyers appear to be having a little more success. With inventory constraints and home prices starting to ease, purchase applications have now trended higher on an annual basis for six straight weeks.”

 Freddie Mac reports the following national averages for the week ending Sept. 27:

  • 30-year fixed-rate mortgages: averaged 4.72 percent, with an average 0.5 point, rising from last week’s 4.65 percent average. Last year at this time, 30-year rates averaged 3.83 percent.
  • 15-year fixed-rate mortgages: averaged 4.16 percent, with an average 0.5 point, rising from last week’s 4.11 percent average. A year ago, 15-year rates averaged 3.13 percent.
Source: Freddie Mac

Market Shifting to Home Buyers’ Favor

A housing market defined by rapidly rising home prices, bidding wars, a lack of inventory, and sellers with the upper hand in negotiations may be changing. “The signs are pointing to a market that’s shifting toward buyers,” says Danielle Hale, realtor.com®’s chief economist. “But in most places, we’re still a long way from a full reversal.”

After all, home sales aren’t exactly tanking. Prices for existing homes were up 4.6 percent from a year ago in the National Association of REALTORS®’ latest housing report. The median home list price in August was up 7 percent from last year.

While these numbers are still higher than last year, economists point to a slowing growth in the percentage jumps. Last year, median home list prices increased by 10 percent from the previous year and by 9 percent the year before that.

Housing Hurdles Taint Healthy Economy

As housing inventory increases and home prices begin to ease, the door to home ownership is opening for more buyers. But Freddie Mac economists aren’t optimistic that the real estate market will be able to break even with last year’s sales levels.

In their September forecast, Freddie’s economists point to a booming economy and job market, but point out a stalled housing market. They consider the main factors to be weaker housing affordability, constraints that are limiting home building, and ongoing supply and demand imbalances.

Economists predict that many prospective buyers will continue to have difficulty breaking into the market. They are forecasting home sales for both new and existing homes to fall 0.8 percent this year and for home price growth to moderate at 5.5 percent.

Source: “Freddie Mac September Forecast,” Freddie Mac (Sept. 24, 2018)