DAILY REAL ESTATE NEWS | WEDNESDAY, JANUARY 27, 2016
REALTORS® nationwide expect home prices to inch up 3.2 percent over the next 12 months, according to the latest REALTORS® Confidence Index Survey, based on a monthly survey of more than 50,000 NAR members about their local markets and most recent transactions. Overall, real estate professionals expect the recent strong growth in home prices to moderate as rising prices hamper affordability in many areas.
2016 State-by-State Price Predictions by the National Association of REALTORS
REALTORS® in Washington, Oregon, Wyoming, Colorado, and Florida are the most optimistic about price growth in the next year – with a median expected price growth of 4 to 5 percent.
The infographic above, from the REALTORS® Confidence Index Survey, breaks down expectations of REALTORS® on home prices over the next 12 months for each state.
The end of the year brought a sizable boost to existing home sales, as delayed closings from new mortgage rules pushed some would-be November transactions to December, according to the National Association of REALTORS®. Existing-home sales — which are completed transactions for single-family homes, townhomes, condos, and co-ops — rose 14.7 percent month-over-month to a seasonally adjusted annual rate of 5.46 million in December. Sales are now 7.7 percent above a year ago.
That marks the best year of existing-home sales since 2006, though it’s still well below the record for that year, which was a whopping 6.48 million.
“While the carryover of November’s delayed transactions into December contributed greatly to the sharp increase, the overall pace taken together indicates sales these last two months maintained the healthy level of activity seen in most of 2015,” says Lawrence Yun, NAR’s chief economist. “Additionally, the prospect of higher mortgage rates in coming months and warm November and December weather allowed more homes to close before the end of the year.”
The Know Before You Owe initiative, which took effect Oct. 3, 2015, prompted some delays in closings as lenders adjusted to new rules and the rollout of a new mortgage form to consumers.
“December’s rebound in sales is reason for cautious optimism that the work to prepare for Know Before You Owe is paying off,” says NAR President Tom Salomone. “However, our data is still showing longer closing timeframes, which is a reminder that the near-term challenges we anticipated are still prevalent. NAR advised members to extend the time horizon on their purchase contracts to address this concern.”
5 Stats to Judge the Real Estate Market
1. Home prices: The median existing-home price for all housing types was $224,100 in December, up 7.6 percent year-over-year ($208,200).
2. Days on the market: Thirty-two percent of homes sold last month were on the market for less than a month. Properties, on average, stayed on the market for 58 days in December, which is below the 66 days in December 2014. Broken out, the properties on the market the longest amount of time in December were short sales, which had a median of 86 days. Foreclosures sold in 68 days, on average, while non-distressed homes took 57 days.
3. All-cash sales: All-cash transactions comprised 24 percent of transactions in December, down from 26 percent a year ago. Individual investors, who account for the bulk of cash sales, purchased 15 percent of homes in December, down from 17 percent a year ago.
4. Distressed sales: Foreclosures and short sales dropped to 8 percent in December, down from 11 percent a year ago. Of that, foreclosures made up 6 percent of December sales and short sales comprised 2 percent. Foreclosures sold for an average discount of 16 percent below market value last month, while short sales were discounted 15 percent, on average.
5. Inventory: By the end of December, total housing inventory fell 12.3 percent to 1.79 million existing homes available for sale, reaching a 3.9-month supply at the current sales pace. That is 3.8 percent lower than a year ago (1.86 million).
“Although some growth is expected, the housing market will struggle in 2016 to replicate last year’s 7 percent increase in sales,” says Yun. “In addition to insufficient supply levels, the overall pace of sales this year will be constricted by tepid economic expansion, rising mortgage rates and decreasing demand for buying in oil-producing metro areas.”
Is it really 2016 already? For those of you who happen to be planning on buying a home in the new year—or even just trying to—there’s a whole lot to celebrate. Why? A variety of financial vectors have dovetailed to make this the perfect storm for home buyers to get out there and make an (winning) offer. Here are six home-buying reasons to be thankful while ringing in the new year:
Reason No. 1: Interest rates are still at record lows
Even though they may creep up at any moment, it’s nonetheless a fact that interest rates on home loans are at historic lows, with a 30-year fixed-rate home loan still hovering around 4%.
“Remember 18.5% in the ’80s?” asks Tom Postilio, a real estate broker with Douglas Elliman Real Estate and a star of HGTV’s “Selling New York.”“It is likely that we’ll never see interest rates this low again. So while prices are high in some markets, the savings in interest payments could easily amount to hundreds of thousands of dollars over the life of the mortgage.”
Reason No. 2: Rents have skyrocketed
Another reason home buyers are lucky is that rents are going up, up, up! (This, on the other hand, is a reason not to be thankful if you’re a renter.) In fact, rents outpaced home values in 20 of the 35 biggest housing markets in 2015. What’s more, according to the 2015 Rent.com Rental Market Report, 88% of property managers raised their rent in the past 12 months, and an 8% hike is predicted for 2016.
“In most metropolitan cities, monthly rent is comparable to that of a monthly mortgage payment, sometimes more,” says Heather Garriock, mortgage agent for The Mortgage Group. “Doesn’t it make more sense to put those monthly chunks of money into your own appreciating asset rather than handing it over to your landlord and saying goodbye to it forever?”
Reason No. 3: Home prices are stabilizing
For the first time in years, prices that have been climbing steadily upward are stabilizing, restoring a level playing field that helps buyers drive a harder bargain with sellers, even in heated markets.
“Local markets vary, but generally we are experiencing a cooling period,” says Postilio. “At this moment, buyers have the opportunity to capitalize on this.”
Reason No. 4: Down payments don’t need to break the bank
Probably the biggest obstacle that prevents renters from becoming homeowners is pulling together a down payment. But today, that chunk of change can be smaller, thanks to a variety of programs to help home buyers. For instance, the new Fannie Mae and Freddie Mac Home Possible Advantage Program allows for a 3% down payment for credit scores as low as 620.
Reason No. 5: Mortgage insurance is a deal, too
If you do decide to put less than 20% down on a home, you are then required to have mortgage insurance (basically in case you default). A workaround to handle this, however, is to take out a loan from the Federal Housing Administration—a government mortgage insurer that backs loans with down payments as low as 3.5% and credit scores as low as 580. The fees are way down from 1.35% to 0.85% of the mortgage balance, meaning your monthly mortgage total will be significantly lower if you fund it this way. In fact, the FHA predicts this 37% annual premium cut will bring 250,000 first-time buyers into the market. Why not be one of them?
Reason No. 6: You’ll reap major tax breaks
Tax laws continue to favor homeowners, so you’re not just buying a place to live—you’re getting a tax break! The biggest one is that unless your home loan is more than $1 million, you can deduct all the monthly interest you are paying on that loan. Homeowners may also deduct certain home-related expenses and home property taxes.
January is one of the top months for new listings to hit the market, making it a good time to start looking. Buyers gain a negotiating advantage when there are more listings in competition with each other. Typical inventory trends tell us that November through January are the peak months for buyers to have the maximum choice of properties before competing buyers begin dwindling the supply and their negotiating advantage. The market as a whole is still a seller’s market, meaning that supply is below normal for the level of demand out there. This shortage is mostly for properties below $200,000. Expect more choice in the upper price ranges.
Get ready for the beginning of the purchasing season! The first week of the year is typically the lowest point for pending sales due to low buyer activity over the Christmas and New Year holidays. The lull doesn’t last for long, however. January is a big time of year for large tourist events in the valley including the Barrett Jackson Car Show, Waste Management Open, Collegiate Football Championship and more. By February, open house traffic will pick up and a notable increase in contracts submitted. In 2015, the number of contracts in escrow nearly doubled between January and June before submitting to the summer slowdown. This year, we’re starting off with 15% more properties in escrow compared to this time last year, a good sign for sellers to kick off the year. There are still a significant number of boomerang buyers recovering their credit after foreclosures and short sales a few years ago, providing a healthy level of optimism for demand in 2016.
For the third consecutive week, mortgage rates edged down, with the 30-year fixed-rate mortgage continuing its run below 4 percent, Freddie Mac reports in its weekly mortgage market survey.
“The Freddie Mac mortgage rate survey had difficulty keeping up with market events this week,” says Sean Becketti, Freddie Mac’s chief economist. “The 30-year mortgage rate dropped 11 basis points to 3.81 percent, the lowest rate in three months. This drop reflected weak inflation and nonstop financial market turbulence that is driving investors to the safe haven of Treasuries. However, the survey was largely complete prior to Wednesday’s Treasury rally that drove the yield on the 10-year Treasury below 2 percent, down 29 basis points since the end of 2015.”
Freddie Mac reports the following national averages with mortgage rates for the week ending Jan. 21:
30-year fixed-rate mortgages: averaged 3.81 percent, with an average 0.6 point, dropping from last week’s 3.92 percent average. Last year at this time, 30-year rates averaged 3.63 percent.
15-year fixed-rate mortgages: averaged 3.10 percent, with an average 0.5 point, falling from last week’s 3.19 percent average. A year ago, 15-year rates averaged 2.93 percent.
5-year hybrid adjustable-rate mortgages: averaged 2.91 percent, with an average 0.5 point, dropping from last week’s 3.01 percent average. Last year at this time, 5-year ARMs averaged 2.83 percent.
It’s a fantastic time to buy a home while interest rates are still at historic lows.
Next year may be a bumpy ride for fixed income. In 2016, the drivers of volatility will be the Fed and the economy.
“We are expecting a lot of uncertainty around the path of rates and when the Fed will hike rates (again),” says George Rusnak, co-head of global fixed income at the Wells Fargo Investment Institute.
He forecasts that 10-year U.S. Treasury notes will end 2016 from 2.5% to 2.75% after hitting 2.24% in late December 2015.
He expects a flattening of the yield curve, with the 30-year Treasury ending 2016 around 3% to 3.5% after reaching 2.95% in December 2015. The Treasury yield curve shows the yield on the most recent issuances of Treasury bills, notes and bonds.
Greg McBride, CFA, Bankrate’s chief financial analyst, also predicts further flattening, with the yield on the 1-year T-bill rising to 1.5% by the end of 2016 from 0.66% at the end of 2015.
“Any increases in longer-term rates will be considerably more restrained for much of 2016,” McBride says.
For Donald Cummings, founder and portfolio manager of Blue Haven Capital, the sweet spot for investors is in intermediate maturities. “With the (10-year) at 2.3%, I’m still in the 7- or 8-year maturities. But, if we get to 2.5% or 2.75%, I can go out into the 10-year or 12-year sector because then I’m getting compensated for going out,” he says.
The number of high-rises, mid-rises and low-rises being built, restored and renovated have been absolutely BOOMING in Central Phoenix! These buildings are old mixed in with new and provide amenities galore. Downtown Phoenix is the new home of loft traditions where space and creativity have been merging into stylistic, personalized urban expression. Many industrial buildings have been converted into desirable, luxurious, lofts or condominiums for your taking. If a single-family home is not for you but simple living is, (no yard responsibilities, etc.), then you’ve come to the right place. Or maybe you’re an artist looking to live where you work. I have ideas for you.
Here, you will find real-time, live listings of all Downtown, Central and North Phoenix condos for sale, Urban Lofts for sale, Condos in High-Rises for sale, and pretty much any dwelling type that is not a single-family home. Whether you wish to buy, sell, renovate or design a loft or condominium in Phoenix, HistoricPhoenixDistricts.com and Downtown Life has the property and solution for you.
Downtown and Central Phoenix is fun urban living. It is a series of distinct urban and historical phoenix neighborhoods where neighbors know each other and are constantly welcoming new neighbors as the downtown area continues its growth.
You can walk for coffee, breakfast, lunch, dinner, drinks and entertainment including the First Friday Art Walk, museums, sporting events, shopping, parks and more. It is a place populated by people seeking a way of life that doesn’t require hours of commuting each day. Many people enjoy driving any one of the many Historic Phoenix Districts just to view the architectural designs of the beautiful homes that encompass Phoenix Historic neighborhoods.
While downtown Phoenix grows, you can and experience urban living at its best. No matter what your taste there are homes that will make you happy. Live in an area full of cultural venues and experience the convenience a downtown residence can provide whether in a modern or historic condominium, historic loft, or a townhome. Come be part of downtown life.
When is the 2016 Willo Home Tour? Sunday, February 14th, 2016, from 10 am – 4 pm
Visitors can park at the parking garage located at 1st Avenue and Holly. You are also welcome to park in any available location within the neighborhood. Trolleys will be continually running throughout the day and you are welcome to hop on and off at your convenience. Or if you live in the area, you can simply walk or bike the tour.
Besides touring the homes there is an incredible Street Fair with over 100 vendors providing food, arts & crafts, area services and lot more. Most of the food will be north and south of Monte Vista and 3rd Ave while the other vendors will be lined up and down the streets on Monte Vista and Holly Street between 3rd and 5th avenues.
Music is always a fun part of the Willo Historic Home Tour. You’ll find bands playing all afternoon near the park at 3rd Ave and Monte Vista. They have quite a line up this year with a great variety of music.
Once a year, the Willo Historic District invites residents and Valley visitors to have an inside look at some of the unique homes that make up the neighborhood. Willo is Phoenix’s largest historic district consisting of over 900 homes. Willo is bordered north to south by Thomas and McDowell, and east to west by 1st Avenue and 7th Avenue.
The Willo Historic Home Tour and Street Fair has something for everyone. Each year approximately a dozen architecturally significant homes and the historic firehouse are open to the public for an inside look. The homes range in style from Tudor to Spanish Revival, Bungalow and Ranch and were built from the 1920’s through the 1940’s. If laid back relaxation is more your style then you can enjoy the classic car show on Holly at Third Ave. and the beer/wine garden.
Ticket sales and the street fair are centered around Walton Park in the heart of Willo, where Holly and Monte Vista intersect at Third Avenue.
The Willo Home Tour is the sole fundraiser for the neighborhood and provides the funding for neighborhood movie nights, holiday luminarias, Block Watch, Willo Yard Sale advertising, Kids Club activities and other neighborhood events. The Tour is put on by volunteers who live in the neighborhood.
Once a year, the residents of the Willo Historic District put out the “welcome mat” and open their homes to Valley visitors. Stroll Willo’s tree lined streets from house to house, or jump a trolley that will carry visitors throughout the neighborhood.
Don’t miss this fun-filled opportunity to visit architecturally significant, finely decorated homes while supporting the beautiful neighborhood of Willo.
Mortgage rates have been so low for so long that it is hard to believe nearly everybody hasn’t refinanced to a lower rate yet. Believe it. More than 5 million borrowers could both qualify and benefit from a mortgage refinance, according to a new report from Black Knight Financial Services.
True, that is less than the nearly 7 million who could have refinanced just last spring, when the average rate on the 30-year fixed mortgage was below 3.7 percent. Today, thanks to the rout in the stock market, rates have fallen back just below 4 percent. About 2.4 million borrowers could potentially save $200 or more on their monthly mortgage payments and an additional 1.9 million could save $100 to $200 per month. Add it up, and that is $1.2 billion still on the table, according to Black Knight.
“If rates go up 50 basis points from where they are now, 2.1 million borrowers will fall out of the running; a 100-basis-point increase would eliminate another million, leaving only 2 million potential refinance candidates, the lowest population of refinance candidates in recent history,” said Ben Graboske, senior vice president at Black Knight Data & Analytics.
In other words, borrowers should act now, as mortgage rates are expected to rise through 2016. While mortgage rates do not follow the Federal Reserve’s moves exactly, they will rise with an improving economy and job growth.
The robust rise in home values has helped bring millions of borrowers back above water on their home loans, allowing them to qualify for a refinance. There is also, however, a government refinance program, called HARP, for those still owing more on their loans than their homes are worth. To qualify, borrowers must have loans backed by Fannie Mae, Freddie Mac or the FHA. There are about 430,000 borrowers who could still benefit from HARP.
Rising home values have also given borrowers more “tappable” home equity — that is, money they could take out in the form of a home equity line of credit (HELOC). While underwriting is far more strict for these loans today than during the last housing boom, when people used their homes like ATMs, they are available at low rates. Their popularity, in fact, is growing again, up 35 percent in 2015 from 2014 levels.
Homeowners today have a collective $4.2 trillion in available home equity, up $600 billion over the last year, according to Black Knight. About 37 million borrowers could pull out an average $112,000 before hitting the amount of equity most banks require them to keep in the home. Average credit scores on new HELOC originations today, though, are at a record high.
Californians are the big winners in home equity. More than a third of the nation’s collective home equity is in the state. The state has the most borrowers eligible for a refinance and/or a HELOC. Texas and Florida are next with the most home equity ready to be tapped. Refinancing a primary loan is heavily rate-dependent, but borrowers are still willing to take out a HELOC at higher rates.
“While it’s not a hard and fast rule that borrowers won’t refinance into a higher rate in order to tap available equity — 23 percent of cash-out refi borrowers over the past six months did just that — for the most part, as rates rise, HELOCs will continue to become more popular to homeowners looking to tap available equity,” said Graboske.
Borrowers today appear to be more cautious about their home equity. Those who are taking the money out are using it to pay down debt or to improve their homes, adding value to the investment — as opposed to buying luxury vacations, cars and second homes as they did a decade ago, when home equity was more of an optimistic notion to lenders than an actual reality.
The sell-off in the stock market was a boon to the mortgage market last week. Mortgage application volume jumped 9 percent on a seasonally adjusted basis for the week, compared with the previous week, according to the Mortgage Bankers Association.
Refinance applications were the driver of total volume. They surged 19 percent from the previous week, seasonally adjusted, but are 40 percent below where they were a year ago, when rates were even lower. Applications to purchase a home fell 2 percent week-to-week, although they are 17 percent higher than the same week one year ago. The refinance share of mortgage activity increased to 59.1 percent of total applications from 55.8 percent the previous week.
“Global stock markets plunged last week, led by weakness in China, but further weakened by continued sharp drops in oil prices. Investors drove down Treasury yields in a flight to safety, and mortgage rates fell to their lowest level since last October,” said Michael Fratantoni, the MBA’s chief economist.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) decreased to 4.06 percent, from 4.12 percent, with points increasing to 0.41 from 0.38 (including the origination fee) for 80 percent loan-to-value ratio loans, according to the MBA. For borrowers with high credit scores and significant down payments, lenders offered rates below 4 percent.
Mortgage rates moved very slightly higher Tuesday, as the stock market closed in positive territory. Lenders, however, are looking for a more decisive recovery in stocks, after the rout that has plagued 2016 so far.
“It’s clear that every time it looks like stocks are considering a bigger bounce that rates quickly get in position for a more meaningful move higher,” said Matthew Graham, chief operating officer of Mortgage News Daily. “Rates would be in more trouble if stocks happened to make bigger gains tomorrow (Wednesday).”