July 4, 2017
Counting Our Blessings
Today is July 4th. Our country is almost 250 years old. If you read the headlines, you would think that our country is in more trouble than it has ever has been. True, our country is not perfect, and certainly the fighting emanating from our Nation's Capital does not make us the envy of the world politically. On the other hand, if you take a look at the numbers, our country is again leading the western world with regard to the recovery from the deep world recession.
After peaking at over 10% during the recession, our present unemployment rate is less than 5.0%. The average unemployment rate of the European Member countries is well over 7.0%. During the latter stages of the recovery we have been consistently adding between 150,000 and 200,000 jobs per month. Concurrently, our real estate market has regained just about all of the losses sustained during the recession.
Some are wary that the Federal Reserve Board has raised interest rates four times during the past 18 months. The fact that the Fed is comfortable raising rates for the first time in a decade is evidence that they are getting more comfortable regarding the state of the economy. That does not mean that our economy, our jobs picture and our real estate market does not have room for improvement -- which is why rates continue to be historically very low. But we have come a long way and we continue to improve. Hopefully we will see more of this improvement when the jobs report is released this Friday. In the meantime, happy 4th of July.
Rates were down slightly last week, but rose after the survey was released. For the week ending June 29, Freddie Mac announced that 30-year fixed rates fell to 3.88% from 3.90% the week before. The average for 15-year loans remained at 3.17%, and the average for five-year adjustables moved up to 3.17%. A year ago, 30-year fixed rates averaged 3.48%. Attributed to Sean Becketti, chief economist, Freddie Mac -- "The 30-year fixed rate fell 2 basis points to 3.88 percent this week. However, much of our survey was conducted prior to Tuesday's sell-off in the bond market which drove Treasury yields higher. Rates on home loans may increase in next week's survey if Treasury yields continue to rise." Note: Rates indicated do not include fees and points and are provided for evidence of trends only. They should not be used for comparison purposes.
Current Indices For Adjustable Rate Mortgages
June 30, 2017
|6-month Treasury Security
|1-year Treasury Security
|3-year Treasury Security
|5-year Treasury Security
|10-year Treasury Security
|| 1.724% (May)
|| 0.776% (May)
|11th District Cost of Funds
|| 0.645% (Apr)
|| 4.25% (June)
| The impact of first-time buyers on the American housing market has been highlighted in a new report from mortgage insurer Genworth. The data shows that in the first quarter of 2017, first-time buyers bought the most single-family homes since 2005; 424,000 or 38%. It was an 11% rise from the first quarter of 2016. "Over the past three years, first-time homebuyers have accounted for 85% of the growth in home sales, and have become an important indicator for understanding market trends," said Tian Liu, Chief Economist for Genworth Mortgage Insurance. "Their impact has already been felt in falling inventory and rising home prices, and we expect them to increasingly drive growth to businesses most exposed to this market segment." The figures also reveal that 3 million potential homebuyers are missing from the market following the financial crisis. This pent-up demand is set to lead to a surge of first-time buyers ahead. Genworth says it is the first report of its kind, looking at data from the past 20 years, tracking home sales to first-time homebuyers on a monthly basis and reporting at quarterly intervals, and separately identifying first-time homebuyers enabled by low down payment mortgages, such as conventional loans with mortgage insurance coverage, FHA loans, VA loans, and USDA loans. Source: MPA
Summertime in the housing market brings countless buying and selling opportunities. But with all the competition out there, would you be better off waiting a few months? Real estate experts say no. They contend home prices peak from June to August and say there are advantages to buying during the market’s busiest season. “A huge myth about the real estate market is that homes sell for more in the summer and less in the winter. This is simply not true,” says Dippy Chhina of Dippy Real Estate. Other forces play a role in the asking price, such as the amount of homes for sale in an area, interest rates, and the job market, Chhina notes. “There are more homes on the market in summer than in the winter, and there is also a higher number of sales in the summer than the winter,” Chhina says. Broader inventory means more choices, making buyers “feel more confident in their search because additional properties hit the market every week,” says Sarah Lilly of Five Star Lakeshore Real Estate. “The large inventory offers significantly more opportunities for purchasers to identify specific floor plans, amenities, and locations.” With more properties for sale, buyers may have more leverage in negotiating prices. Those who need to sell their current home to purchase another often find it easier to do in the summer months. “If the client needs to sell a home before buying, the home will be more likely to sell, and potentially at a good price, allowing the client to purchase their new home sooner,” says Joe Lopez of Connect Realty. Source: realtor.com®
Most retirees are deciding not to relocate. During the past seven years, more than 80 percent of people aged 55 and up who live in 17 of the nation's largest housing markets remained in the same county or state, according to a new analysis by real estate data firm CoStar Group. “Most people retire in the same metropolitan area,” says Hans Nordby, a CoStar economist who authored the firm’s report. “You don’t see the migration of snowbirds you would expect to see to the Sun Belt.” Instead, nearly 90 percent of older Americans say they want to age in place, and 80 percent say their current home is where they intend to live out the rest of their lives, according to research by the National Conference of State Legislatures and the AARP Public Policy Institute. “Retirees don’t want to leave home for a coastal community where they are not connected to anyone,” says Paul Irving, chairman of the Milken Institute Center for the Future of Aging. Newer retirees value lifelong learning and job opportunities more than better weather, adds Irving, who is also the creator of the institute’s Best Cities for Successful Aging list. But not every retiree is casting aside ideas of retiring to a beach town. Americans 55 years and older with annual incomes of $75,000 tend to favor markets with warmer weather and retiree-friendly tax policies. Source: CNBC