Owners Question Appraised Values: Too Low?

Homeowners say their homes are worth more than what appraisers say they’re worth, and the gap between the values is growing, according to Quicken Loans’ latest Home Price Perception Index.

Appraisals, on average, were 1.77 percent lower than what homeowners expected, according to the index. This marks the fourth consecutive month in which the gap between homeowner estimates and appraiser opinions has widened.

That said, appraisals are showing higher values than what homeowners expected in some of the hottest housing markets, mainly on the West Coast, according to the index reading for March.

Source: Quicken Loans

‘Mortgage Rates Surprise’ They Near 2017 Low!

tThe 30-year fixed-rate mortgage dropped lower for the third consecutive week and neared its low for 2017, Freddie Mac reports in its weekly mortgage market survey.

“After three straight weeks of declines, the 30-year mortgage rate is now barely above the 2017 low. Next week’s survey rate may be determined by Friday’s employment report and whether or not it can sustain the strength from earlier this year.” says Sean Becketti, Freddie Mac’s chief economist.

Freddie Mac reported the following national averages for the week ending April 6, 2017:

30-year fixed-rate mortgages: averaged 4.10 percent, with an average 0.5 point, falling from last week’s 4.14 percent average. Last year at this time, 30-year rates averaged 3.59 percent.
15-year fixed-rate mortgages: averaged 3.36 percent, with an average 0.5 point, dropping from last week’s 3.39 percent average. A year ago, 15-year rates averaged 2.88 percent.

Source: Freddie Mac

Loan Activity Constrained by Prices, Inventory

A decrease in refinancing activity—due to the uptick in mortgage rates since November 2016—has curtailed overall mortgage application activity in recent weeks. It’s again what was behind the 1.6 percent drop in total mortgage applications last week, says the Mortgage Bankers Association.

Applications for refinances dropped 4 percent last week and are now 33 percent below a year ago.

Meanwhile, applications for home purchases are performing much stronger, rising 1 percent last week and now 8 percent higher than a year ago. Housing analysts say that purchase activity could be much higher, if it weren’t for high prices and a tight supply of homes for-sale in many markets.

Mortgage rates haven’t fluctuated too much over the past few weeks, giving borrowers a temporary reprieve. The average 30-year fixed-rate mortgage was 4.34 percent last week, up slightly from 4.33 percent the week prior.

Source: “Mortgage Applications Fall 1.6%, But Average Loan Size Hits Record High,” CNBC (April 5, 2017)

Homeowners Don’t Want Cookie-Cutter Lawns

Homeowners are focused on making changes to their front yards so they’re markedly different from their neighbors’ yards and easier to maintain, finds the 2017 U.S. Houzz Landscaping Trends Survey.

Homeowners want their yards to look distinct. Only 6 percent of homeowners reported front yards that were nearly identical to those in the neighborhood after their outdoor project, compared to more than a third before the update (36 percent), the Houzz survey shows. Two in five owners say they wanted to make a statement with a new front yard that was “very” or “extremely” different from others in the neighborhood following their update.

More homeowners are turning to low-maintenance plants to enhance their front yards, along with native plants and those that attract insects and birds. More than half of those who updated their front yard say that beds or borders, shrubs, and perennials were the most important to improving curb appeal.

Source: “2017 U.S. Houzz Landscaping Trends Survey,” Houzz (March 29, 2017)

Hispanics Are a Growing Home Buying Force

While the national homeownership rate decreases, ownership rates among Hispanics are defying the trend with steady rises.

The Hispanic homeownership rate grew to 46 percent last year, topping previous highs of 45.6 percent in 2015 and 45.4 percent in 2014, according to the National Association of Hispanic Real Estate Professionals’ 2016 State of Hispanic Homeownership Report.

More than 7.3 million Hispanic households owned their homes in 2016, 330,000 of which were from new households formed in 2016. That comprises 38 percent of all households formed, according to the report.

“The significance of a strong desire for homeownership cannot be overstated,” the report notes.

More information at: “Hispanic Homeownership Rate Rises for Second Straight Year,” RISMedia (March 28, 2017)

 

This Is the Worst ‘Housing Drought’ Ever

The number of homes for sale is at the lowest level on record, according to the National Association of REALTORS®, who began tracking inventory 18 years ago. That means many home buyers likely will find fewer options this spring, and the homes that are being listed tend to sell fast and at a premium.

The lack of new-home supply is one culprit. Housing starts are only at about 75 percent of their historical average. Builders are focusing on pricier segments of move-up buyers, leaving a big void in the demand for lower cost homes that appeal to first-time home buyers. Builders blame the higher costs for land, labor, and materials as forcing them to concentrate on the higher end of the market.

Builders aren’t the only ones to blame, however. Investors purchased about 4 million distressed properties—mostly in the lower-priced starter home segment—during the housing crash. They have been holding onto these properties, continuing to rent them out rather than selling.

Source: “This Is What’s Behind the Severe Housing Drought,” CNBC (March 23, 2017)

Mortgage Rates Retreat Slightly This Week

The 30-year fixed-rate mortgage decreased slightly, following two months of steady rises.

“The 30-year mortgage rate moved with Treasury yields and dropped 7 basis points to 4.23 percent. This marks the greatest week-over-week decline for the 30-year mortgage rate in over two months, a stark contrast from last week’s jump following the FOMC announcement.” says Sean Becketti, Freddie Mac’s chief economist.

Freddie Mac reports the following national averages for the week ending March 23:

  • 30-year fixed-rate mortgages: averaged 4.23 percent, with an average 0.5 point, falling from last week’s 4.30 percent average. Last year at this time, 30-year rates averaged 3.71 percent.
  • 15-year fixed-rate mortgages: averaged 3.44 percent, with an average 0.5 point, dropping from last week’s 3.50 percent average. A year ago, 15-year rates averaged 2.96 percent.

Source: Freddie Mac

Home Loan ‘Interest Rates Move Higher’

As expected, the FOMC announced its first rate hike of 2017 and hinted at additional increases throughout the remainder of the year. Although our survey was conducted prior to the Fed’s decision, the release of the February jobs report all but guaranteed a rate hike and boosted the 30-year mortgage rate this week. Increasing inflation, continued gains in the labor market and the Fed’s intentions for further rate increases—all three will keep pushing mortgage rates up this year.

Freddie Mac reports the following national averages rates for the week ending March 17:

’30-year fixed-rate mortgage’ (FRM) averaged 4.30 percent with an average 0.5 point for the week ending March 16, 2017, up from last week when it averaged 4.21 percent. A year ago at this time, the 30-year FRM averaged 3.73 percent.
’15-year fixed-rate mortgage’ (FRM) this week averaged 3.50 percent with an average 0.5 point, up from last week when it averaged 3.42 percent. A year ago at this time, the 15-year FRM averaged 2.99 percent.

Source: Freddie Mac

Fed Votes to Raise Rates: The Housing Impact?

The Federal Reserve is picking up the pace, voting on Wednesday to raise its key interest rate just three months after its last rate hike. The Fed announced that short-term interest rates will increase by one-quarter of a percentage point and suggested that two similar increases likely will occur later this year. Mortgage rates aren’t directly tied to the Fed’s short-term interest rates but tend to follow them.

As of Tuesday, the 30-year fixed-rate mortgage averaged 4.39 percent, according to Mortgage News Daily. Last summer, rates were near record lows of 3.44 percent.

“Rising inflation will predominantly dictate the next monetary policy decision, but another short-term rate hike should be expected by the end of the summer,” Lawrence Yun, the chief economist of the National Association of REALTORS®, notes at the association’s Economists’ Outlook blog. “Right now, rents and housing costs are increasing faster than other components because of the stubborn housing shortages in much of the U.S. To contain inflation and slow the pace of future rate hikes, more home construction is needed now.”

Source: “How the Fed’s Latest Move Is Expected to Hurt Buyers,” realtor.com® (March 15, 2017) and “Fed Quickens Pace, Raises Rate 3 Months After Last Hike,” RISMedia (March 15, 2017)

This Could Boost Millions of Credit Scores

Equifax, Experian, and TransUnion announced they will soon remove tax lien and civil judgment data from some consumer credit records. The reason for this change is that many liens and most judgments fail to include vital pieces of information. Beginning on July 1, the public records data the firms use must include these data points: the consumer’s name, address, and either a social security number or a date of birth. Existing reports that fail to comply will be struck from the consumer’s credit record and new data that does not have that information will not be added.

Credit scores are weighed carefully by lenders in making decisions about loan terms and how much consumers can borrow, and can be very important in securing a sustainable mortgage. FICO estimates the changes will cause an improvement to about 12 million consumer scores; however the boost will be modest, likely less than 20 points.

In recent months, several lawsuits brought by states have been pushing credit reporting companies to remove some categories of negative data from credit score reports, such as information related to library fines or gym memberships. But some experts fear removing negative public record information could pose a greater risk to lenders.

Source: “Reporting Change Could Raise Credit Scores, Risk,” Mortgage News Daily (March 14, 2017)