Monthly Archives: May 2010

The Supply Of New Homes For Sale Just Dropped Off A Cliff

May 28, 2010
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New Home Supply April 2009 - April 2010The supply of newly-built homes for sales plummeted in April, a positive indicator for the Tumwater housing market as we head into the summer months.

It’s no wonder that homebuilders are breaking new ground at the fastest clip in 2 years. 

At the current sales pace, the nation’s complete supply of new homes would be sold in just 5 month’s time.  That’s more than double the pace of a year ago.

Also, as more good news, in terms of total housing units, the government reports that New Home Sales topped one half-million homes sold for the first time since May 2008.

It’s a similar spike as within the Existing Home Sales data released earlier this week.

But before we declare the housing market “repaired in full”, we have to consider a few of the reasons why home sales are charting so strongly.

The first reason is the federal homebuyer tax credit’s April 30 expiration. In order to claim up to $8,000 in tax credits, home buyers must have been in mutual contract for a property before May 1. There is no doubt this contributed to a run-up in sales, especially among first-time home buyers.

The second reason is that mortgage rates have remained exceptionally low, defying expert predictions.  Low rates don’t sell homes, but they do make monthly payments easier to manage for households torn between renting or buying.

And, lastly, March and April’s new home sales may have been buoyed by aggressive discounting on behalf of homebuilders.  As compared to February 2010, April’s average new home sale price was lower by 13 percent.  That’s a sharp drop in a short period of time.

For now, though, homes are selling, supplies are dropping, and buyer interest is high. It’s no wonder builder confidence is soaring.

Home Price Index Rises 0.3% in March 2010

May 26, 2010
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Home Price Index from April 2007 peakHome values rose in March, according to the Federal Home Finance Agency’s most recent Home Price Index. Values were reported higher by 0.3 percent, on average, from February.

We use the phrase “on average” because the Home Price Index is broad-reaching, national housing statistic. It ignores the dynamics of neighborhood real estate markets like King County as well as citywide markets like Olympia , too.

Instead, the Home Price Index focuses on state and regional statistics.

For example, in March 2010 as compared to February:

  • Values in the East South Central region rose 2.5%
  • Values in the Mountain states rose 1.1%
  • Values in the Middle Atlantic states fell 1.0%

Of course, none of this data is especially helpful for today’s home buyers and sellers.

Real estate is a local phenomenon that can’t be summarized by state or region. What matters most to buyers and sellers is the economics of a neighborhood and that level of granularity can’t be served up by a national housing report like the Home Price Index.

The Home Price Index data is additionally unhelpful to buyers and sellers in that it reports on a 2-month delay.

In other words, Home Price Index is not even a fair reflection of today’s market — it highlights the real estate market as it existed 60 days ago.

So why is the Home Price Index even published? Because government, business and banks rely on the reports.  As a national indicator, the Home Price Index helps governments make policy, businesses make decisions, and banks make guidelines. This, in turn, trickles down to Main Street where it impacts every one of us — and eventually influences real estate.

Since peaking in April 2007, the Home Price Index is off 13.44 percent.

Home Supplies Tick Higher, Creating An Opening For Today’s Home Buyers

May 25, 2010
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Existing Home Sales Apr 2009-Apr 2010Sales of existing homes rose in April, buoyed by an expiring home buyer tax credit and exceptionally low mortgage rates.

As compared to March, April’s Existing Home Sales rose by 410,000 units nationwide — the second straight month of large gains. An “existing home” is a home resold by a prior owner (i.e. not new construction).

It’s a solid report for housing overall, with rising sales suggesting that the real estate market’s recovery is ongoing. However, the data presented a mixed message.

According to the National Association of Realtors®, although the number of homes sold ticked higher in April,  so did the supply of existing homes for sale, too.

Sellers are now listing homes faster than buyers can buy them.

After adding another 0.3 months of supply in April, resale home supply is nearly two full months larger than at November 2009′s low-point. This put downward pressure on home prices.

Furthermore, because 49% of April’s buyers were first-time buyers and the tax credit has since ended, we can expect that sellers will continue to outweigh buyers in the months ahead.

It presents an interesting opportunity for June’s home buyers. Mortgage rates are still at their lowest levels of the year — despite expert predictions to the contrary — and homes remain affordable. Plus, in a lot of markets, home values have started to creep higher.

There’s good values and good rates but neither should last long. For the next few weeks, real estate may be in its 2010 sweet spot. 

If you were thinking of moving in September of this year or later, consider moving up your timeframe.

What’s Ahead For Mortgage Rates This Week : May 24, 2010

May 24, 2010
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Existing Home Sales Mar 2009-March 2010Another week, same old story. 

Mortgage markets improved again last week on worsening news out of Greece and the Eurozone. Then, as contagion mentality set in, U.S. mortgage bonds gained and mortgage rates fell.

It’s the 4th straight week in which conforming mortgage rates in Washington State improved and, against the expectations of experts everywhere, it’s now late-May and mortgage rates are as low as they’ve been all year.

If you’re a homeowner and haven’t looked at refinancing lately, it may be a good time to call your loan officer to hear your options. Especially because low rates can’t last forever.

The European market concerns are likely overblown and the U.S. economy continues to expand at a measured pace.

This week, housing and inflation data takes center stage.

  • Monday : Existing Home Sales data
  • Tuesday : Case-Shiller Index; Home Price Index
  • Wednesday : New Home Sales data
  • Thursday : GDP
  • Friday : Personal Consumption Expenditures

Each of these data points has the power to move mortgage rates — especially because trading volume is expected to thin as the 3-day weekend nears. As volume drops on Wall Street, it will be harder to match buyers and sellers and, as a result, mortgage pricing will get (more) erratic.

Rates should be most stable at the start of the week. It may be the best time to lock a rate. Call CU Mortgage Division at (360) 539-4687 or visit www.williamatuning.com .

Should You Refinance Your Mortgage?

May 22, 2010
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Because of strife in Greece, Spain and North Korea, conforming mortgage rates are back to all-time lows. They’re at levels not seen in 50 years.  For homeowners that missed the Refi Boom of November 2009, it’s a second chance.

In this well-presented, 3-minute video from NBC’s The Today Show, you’ll get tips getting low rates and choosing the best time to lock in.

Some of the topics covered include:

  • Why were the experts wrong about rates moving higher this summer?
  • How much money can you save with a 1 point drop in your interest rate?
  • Should you buy a bigger home now that rates have fallen?

The advice in the piece is matter-of-fact and centered.  There is no cheerleading and the message is honest. Mortgage rates are low and they likely won’t stay that way.  If you’ve been thinking about a refinance, talk to your CU Mortgage Division as soon as possible at (360) 539-4687 or visit www.cumortgagedivision.com .

Mortgage Market News for the week ending May 21, 2010

May 21, 2010
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Investors Shift to Safer Assets

This week, uncertainty about the pace of the economic recovery caused investors to shift to relatively safer assets, including government insured mortgage-backed securities (MBS). Also positive for mortgage markets, the economic data released this week showed that inflation remains extremely low. As a result, mortgage rates declined during the week, reaching the lowest levels of the year.

Concern about the level of global economic growth drove financial markets this week. Troubled European countries will be forced to reduce government spending, and Chinese officials indicated that they will tighten monetary policy to reduce inflation. In the US, it’s not clear to what degree the new financial regulation bill will cause banks to reduce lending, leading to slower economic growth. In response to periods of uncertainty such as this, investors seek to reduce risk by moving to safer assets such as bonds, and greater demand for MBS pushes mortgage rates lower.

This week’s news from the housing sector was mixed. April Housing Starts increased above the consensus forecast to the highest level since October 2008. Building Permits, a leading indicator, declined moderately. The May NAHB Homebuilder confidence index rose to the highest level since August 2007. Even with the end of the homebuyer tax credit, the builders surveyed remained optimistic about the next six months.

 

 
 

Also Notable:

  • April Core CPI inflation fell to the lowest level in 44 years
  • Weekly Jobless Claims unexpectedly jumped well above the consensus forecast
  • The Treasury will auction $113 billion in 2-yr, 5-yr, and 7-yrs next week
  • Oil prices fell as low as $65 per barrel, reaching the lowest level since July 2009
     
 

 

 
Average 30 yr fixed rate:
Last week: -0.05%  
This week: -0.20%  
Stocks (weekly):
Dow: 10,100 -500
NASDAQ: 2,225 -125

 

   Week Ahead

Next week, a wide mix of economic data will shed some light on the level of economic growth. Existing Home Sales will be released on Monday, and New Home Sales will come out on Wednesday. Durable Orders, an important indicator of economic activity, will also be released on Wednesday. Thursday, a revised figure for first quarter Gross Domestic Product (GDP) will come out. The Chicago PMI manufacturing index and Personal Income are scheduled for Friday. Consumer Sentiment and Consumer Confidence will round out the Economic Calendar. In addition, there will be Treasury auctions on Tuesday, Wednesday, and Thursday.

Why should you opt for a trusted mortgage lender? – by Samantha Taylor

May 21, 2010
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If you want to buy a home for yourself, by taking out a mortgage loan, you need to choose the right mortgage lender. Choosing the right mortgage lender is not less important than choosing the right house for you. Just like you have done in choosing your house, you should shop around for the best lender too. You should get referrals from your relatives, friends and neighbors.

Qualities of a good lender

In a good lender, you should look for the qualities mentioned below:

    * The lender will question you a lot about your personal financial condition
    * He will find the most appropriate loan for you
    * He will not ask you anything to make you feel uncomfortable
    * He will promptly give answers to your emails and calls

Reasons to opt for a known lender

Through the ages, mortgage fraud  due to unscrupulous lenders, has been an increasing crime in the US.  During the year 2007, the Suspicious Activities Reports (SARs) from various financial institutions have reported an increase in mortgage fraud to 46,717 cases, which resulted in a loss of $813 million.

Many homeowners were victims of mortgage fraud and ended up with their home in foreclosure. In 2007, the number of foreclosures was more than 2.2 million. So, you should opt for a recommended mortgage lender, in order to get the most suitable mortgage deal and remain stress free.

How to choose the right lender

To choose the most appropriate lender, you should follow the steps mentioned below:

    * Ask about costs: You should ask each lender about the interest rate, loan origination fees, points, closing costs, any extra fees charged by them, etc. You should ask the same question to all the lenders and within a span of a couple of days, so  that there will be little chance of change in market conditions.
    * Check credibility: You should look for a licensed loan officer. He should be registered with the Nationwide Mortgage Licensing System or NMLS.
    * Get referrals: It is the best option to get referrals of trusted lenders from your friends, relatives, your Realtor or neighbors. While getting the referral, you should ask your friend the following questions:

          * Did the lender explain the loan types in understandable language?
          * Were there in hidden fees which were not previously disclosed?
          * Did the lender lock in the rate that he had promised?
          *  Was he responsive to your problem and could deal with it promptly?

The right mortgage lender will help you properly and guide you through the whole loan process. The best lender is the one who will always cater to your needs and will find out the best mortgage deal to suit your budget.

Author’s Bio :

Samantha Taylor is the Community Mentor of MortgageFit and has been contributing her suggestions to the Community since 2005. Not just that, she has also made notable contributions through the various articles written on different subjects related to the mortgage industry. Few of her popular articles would include names like ‘Mortgage that you can afford’, ‘Mobile Home Loan with Bad Credit’, and ‘How much mortgage can I borrow’?

 

Home Opportunity Index Ranks 225 Metro Areas For Affordability

May 21, 2010
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Home Affordability - Top and Bottom 5 markets 2010 Q1

With home prices still relatively low and mortgage rates trolling near their all-time best levels, it’s no surprise that home affordability is extraordinarily high in Thurston County Washington and most U.S. markets.

According to the quarterly Home Opportunity Index as published by the National Association of Home Builders, more than 72 percent of all new and existing homes sold between January-March 2010 were affordable to families earning the national median income.

It’s the second highest reading in the survey’s history.

Of course, on a city-by-city basis, home affordability varies. 

In the first quarter of 2010, for example, 98.7% of homes sold in Bay City, Michigan were affordable for families earning the area’s median income and in Indianapolis, the percentage was almost 95 percent.

Indianapolis has held the top quarterly ranking for close to 5 years now.

On the opposite end of the spectrum, the New York-White Plains, NY-Wayne, NJ region earned the “least affordable” metropolitan area for the 8th consecutive quarter.  Just 20.9% of homes are affordable to families earning the local median income.

The rankings for all 225 metro areas are available on the NAHB website but regardless of where your town ranks, home affordability remains high as compared to historical values but it likely won’t last long.  Home values are recovering in many markets and mortgage rates won’t stay this low forever.

All things equal, buying a home may never come this cheap again. If you were planning to buy later this year, consider moving up your timeframe.

Call CU Mortgage Division to apply for your Mortgage Loan Pre-Approval at (360) 539-4687 or visit www.williamatuning.com .

The Fed’s April Minutes Push Mortgage Rates Even Lower

May 20, 2010
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FOMC April 2010 Minutes

After starting the day in the red, mortgage rates rebounded Wednesday afternoon after the Federal Reserve released its April 27-28, 2010 meeting minutes.

It’s good news for home buyers and would-be refinancers in Lacey.  Mortgage rates continue to troll along multi-year lows.

“Fed Minutes” are lengthy, detailed recaps of Federal Open Market Committee meetings, not unlike the minutes you’d see after a corporate conference, or condo association gathering. The Federal Reserve publishes Fed Minutes 3 weeks after each respective FOMC get-together.

The Fed meets 8 times annually.

Because of the minutes’ content and density, it’s of tremendous value to Wall Street and investors.  Fed Minutes provide a glimpse into the conversations and debates that shape the country’s monetary policy.

The broad scope of the published meeting minutes are in sharp contrast to the more well-known, post-meeting press release which reads more like a policy summary.

And the extra words matter.

Here’s some of what the Fed discussed last month:

  • On Greece : A crisis in Greece could slow U.S. domestic growth
  • On housing : Despite government support, growth appears to have stalled
  • On its mortgage buyback program : There’s little reason to sell mortgage bonds right now

When the markets saw the Fed Minutes, what had been a down day for bond markets turned positive. The less-than-sunny outlook for the near-term U.S. economy sparked bond sales, pushing prices higher.

Mortgage rates move opposite mortgage bond prices.

Wall Street is always in search of clues from inside the Fed about what’s next for the economy and post-FOMC minutes usually give good fodder.  April’s meeting was no different.

For now, mortgage rates remain near all-time lows but once the Eurozone issues are settled, rates are likely to rise. If you haven’t locked a mortgage rate, your window may be closing.  Once the economy is turning around for certain, mortgage bonds will be among the first of the casualties.

Call CU Mortgage Division at (360) 539-4687 or visit www.williamatuning.com for additional mortgage related information.

Housing Starts Rise In April, Exerting Downward Pressure On Home Prices

May 19, 2010
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Housing starts May 2008 - April 2010

Single-family Housing Starts rose by 55,000 last month, suggesting ample housing stock from which Tumwater can choose this summer.

The report is a slightly larger read than what economists had expected.

Furthermore, for the first time since June 2009, Housing Starts appears to have broken away from its half-million unit plateau. 593,000 new homes were started in April.

Ordinarily, both Wall Street and Main Street would celebrate a strong housing sector report like this, but the Department of Commerce’s press release also held two cautionary notes.

The first point of caution is a mathematical one.  Although single-family starts increased by 10.2 percent, the survey had a Margin of Error of 10.7 percent. This means that Housing Starts may have fallen by 0.5 percent and the report is statistically worthless.

The second point of caution is tied to Building Permits, a complementary data point in the same Department of Commerce report.  In April, Building Permits fell by almost 11 percent with a tiny Margin of Error of less than 2%.  This tells us that builders are pulling back — a sign of low housing market confidence

According to the Census Bureau, 82% of homes start construction within 60 days of permit-issuance. Housing Starts, therefore, should ease though June and July.

Home prices are based on housing’s supply and demand.  For the next few months, supply should elevate, helping prices remain suppressed, after which, supply should dwindle. 

The best time to buy a home, therefore, may be now.  As the summer months come to close, we may find that buyers vastly outweigh sellers.