Is the Recent Dip in Interest Rates Here to Stay?

Interest rates for a 30-year fixed rate mortgage climbed consistently throughout 2018 until the middle of November. After that point, rates returned to levels that we saw in August to close out the year at 4.55%, according to Freddie Mac’s Primary Mortgage Market Survey. After the first week of 2019, rates have continued their downward trend. As Freddie Mac’s Chief Economist Sam Khater notes, this is great news for homebuyers. He states, “Mortgage rates declined to start the new year with the 30-year fixed-rate mortgage dipping to 4.51 percent. Low mortgage rates combined with decelerating home price growth should get prospective homebuyers excited to buy.” In some areas of the country, the combination of rising interest rates and rising home prices had made some first-time buyers push pause on their home searches. But with more inventory coming to market, continued price growth, and interest rates slowing, this is a great time to get back in the market! Will This Trend Continue? According to the latest forecasts from Fannie Mae, the Mortgage Bankers Association, and the National Association of Realtors, mortgage rates will increase over the course of 2019, but not at the same pace they did in 2018. You can see the forecasts broken down by quarter below. Bottom Line Even a small increase (or decrease) in interest rates can impact your monthly housing cost. If buying a home in 2019 is on your short list of goals to achieve, let’s get together to find out if you are able…

Belief in Homeownership as an Investment is Far from Dead

Following last year’s real estate market was like riding a rollercoaster. The market started off strong in 2018 and then softened before finishing with a mild flurry. However, one thing that did not waiver was America’s belief that owning a home makes sense from a financial standpoint. An end-of-the-year survey by the Federal Reserve Bank’s Center for Microeconomic Data revealed that: “The majority of households continue to view housing as a good financial investment.” And that percentage has increased over the last three years. Bottom Line Though there is some uncertainty as to how the real estate market will perform over the next twelve months, one thing remains very certain: America’s belief in homeownership.

Where is the Housing Market Headed in 2019? [INFOGRAPHIC]

Some Highlights: ­Interest rates are projected to increase steadily throughout 2019, but buyers will still be able to lock in a rate lower than their parents or grandparents did when they bought their homes! Home prices will rise at a rate of 4.8% over the course of 2019 according to CoreLogic. All four major reporting agencies believe that home sales will outpace 2018!

24 Hours that Suddenly Improved the Market

This year started strong for real estate, but then the market began to soften. Home inventory in the starter and move-up categories dwindled to almost nothing, mortgage rates were projected to rise, and home sales had decreased for several months in a row. To many, the outlook heading into 2019 appeared dim… at best. Then, in a 24-hour window last week, things seemed to change. On Wednesday, the National Association of Realtors’ (NAR) revealed in their Existing Homes Sales Report that home sales had INCREASED for the second consecutive month. The next day, NAR’s economic research team announced that the percentage of first-time buyers in the market was higher than last month and even higher than a year ago. What happened to turn around the downward momentum in the market?  You only needed to wait a few hours to find out. On the heels of NAR’s revelations, Zillow released their November Real Estate Market Report that explained: “After nearly four years of annual declines in inventory, the number of homes for sale has now increased year-over-year for three straight months…” Ending 2018, we now know two things: Listing inventory increased over the last three months Home sales increased over the last two months Maybe a lack of inventory was the major challenge all along. But, what about those pesky interest rates? Last Thursday (the day after all of the above news), Freddie Mac announced that mortgage rates did not increase but instead decreased…again. From their release: “The response to the recent decline in mortgage rates is already being felt in…

Buyers Are Looking for Your Home, Now [INFOGRAPHIC]

Some Highlights: Existing home sales are currently at an annual pace of 5.32 million and have increased on a monthly basis for the last two months. The inventory of existing homes for sale remains below the 6-months needed for a normal market and is now at a 3.9-month supply. Inventory remains low due to high demand from buyers who are still looking for houses to buy!

4 Quick Reasons NOT to Fear a Housing Crash

There is a lot of uncertainty regarding the real estate market heading into 2019. That uncertainty has raised concerns that we may be headed toward another housing crash like the one we experienced a decade ago. Here are four reasons why today’s market is much different: 1. There are fewer foreclosures now than there were in 2006 A major challenge in 2006 was the number of foreclosures. There will always be foreclosures, but they spiked by over 100% prior to the crash. Foreclosures sold at a discount and, in many cases, lowered the values of adjacent homes. We are ending 2018 with foreclosures at historic pre-crash numbers – much fewer foreclosures than we ended 2006 with. 2. Most homeowners have tremendous equity in their homes Ten years ago, many homeowners irrationally converted much, if not all, of their equity into cash with a cash-out refinance. When foreclosures rose and prices fell, they found themselves in a negative equity situation where their homes were worth less than their mortgage amounts. Many just walked away from their houses which led to even more foreclosures entering the market. Today is different. Over forty-eight percent of homeowners have at least 50% equity in their homes and they are not extracting their equity at the same rates they did in 2006. 3. Lending standards are much tougher One of the causes of the crash ten years ago was that lending standards were almost non-existent. NINJA loans (no income, no job, and no assets) no longer…

Homeownership Remains a Huge Part of the American Dream

As we head into 2019, many news outlets and housing experts warn that the housing market may slow down. Over the last six years, the inventory of homes for sale has been near historic lows, which has been the force behind increasing home prices. This has been great news for sellers as many of them have been able to capitalize on the demand in the market and sell their homes quickly and at a great profit. One of the big reasons why inventory has remained so low for so long is that an entire generation of home buyers is finally buying! The millennial generation (ages 19-35) has been the driving force behind bidding wars in many areas of the country as they ditch their renter lifestyles and put down roots in new communities. First American recently released a study entitled “How ‘Renter’ Millennials Will Transform the Housing Market.” In their study, they explained that: “…As more millennials age into their early-to-mid thirties, and begin to get married, have children and form households, they will continue to be the primary drivers of homeownership demand.” Because of this, it is safe to say that one aspect of 2019’s housing market that WILL NOT slow down is the demand for housing from young renters who are no longer satisfied living in someone else’s homes. According to the latest Housing Vacancies and Homeownership Report from the Census Bureau, home buyers under 35 are already out-buying older Americans. The chart below shows the year-over-year change…

No Bubble Here! How New Mortgage Standards Are Helping

Real estate is shifting to a more normal market; the days of national home appreciation topping 6% annually are over and inventories are increasing which is causing bidding wars to almost disappear. Some see these as signs that the market will soon come tumbling down as it did in 2008. As it becomes easier for buyers to obtain mortgages, many are suggesting that this is definite proof that banks are repeating the same mistakes they made a decade ago. Today, we want to assure everyone that we are not heading to another housing “bubble & bust.” Each month, the Mortgage Bankers’ Association (MBA) releases a measurement which indicates the availability of mortgage credit known as the Mortgage Credit Availability Index (MCAI). According to the MBA: “The MCAI provides the only standardized quantitative index that is solely focused on mortgage credit. The MCAI is calculated using several factors related to borrower eligibility (credit score, loan type, loan-to-value ratio, etc.).” * The higher the measurement, the easier it is to get a mortgage. During the buildup to the last housing bubble, the measurement sat at around 400. In 2005 and 2006, the measurement more than doubled to over 800 and was still at almost 600 in 2007. When the market crashed in 2008, the index fell to just over 100. Over the last decade, as credit began to ease, the index increased to where it is today at 186.7 – still less than half of what it was prior to the buildup…

What If I Wait A Year to Buy a Home?

National home prices have increased by 5.4% since this time last year. Over that same time period, interest rates have remained near historic lows which has allowed many buyers to enter the market and lock in low rates. As a seller, you will likely be most concerned about ‘short-term price’ – where home values are headed over the next six months. As a buyer, however, you must not be concerned about price but instead about the ‘long-term cost’ of the home. The Mortgage Bankers Association (MBA), Freddie Mac, and Fannie Mae all project that mortgage interest rates will increase by this time next year. According to CoreLogic’s most recent Home Price Insights Report, home prices will appreciate by 4.8% over the next 12 months. What Does This Mean as a Buyer? If home prices appreciate by 4.8% over the next twelve months as predicted by CoreLogic, here is a simple demonstration of the impact that an increase in interest rate would have on the mortgage payment of a home selling for approximately $250,000 today: Bottom Line If buying a home is in your plan for this year, doing it sooner rather than later could save you thousands of dollars over the terms of your loan.

The Tale of Two Markets [INFOGRAPHIC]

Some Highlights: An emerging trend for some time now has been the difference between available inventory and demand in the premium and luxury markets and that in the starter and trade-up markets and what those differences are doing to prices! Inventory continues to rise in the luxury and premium home markets which is causing prices to cool. Demand continues to rise with lower-than-normal inventory levels in the starter and trade-up home markets, causing prices to rise on a year-over-year basis for 80 consecutive months.