Thinking of Moving Up or Listing Your Home?

March 10, 2017

NEW YORK – March 9, 2017 – Borrowers are getting spooked by rising mortgage rates and, as a result, rushing to lock in rates before any further increases. That, in turn, is pushing mortgage application volume higher – increasing a seasonally adjusted 3.3 percent week over week, the Mortgage Bankers Association reported Wednesday.

More buyers are also turning to adjustable-rate mortgages (ARMs) to try to get more savings in their monthly payments too.

“Mortgage rates increased last week as remarks by several key Federal Reserve officials strongly signaled a March rate increase,” says Joel Kan, an MBA economist. “This was further supported by a few solid economic data releases, including GDP, inflation and manufacturing gauges.”

The 30-year fixed-rate mortgage increased to 4.36 percent from 4.30 percent the previous week, the MBA reports; and the share of ARMs reached its highest level of mortgage applications since 2014. The average loan size for purchase applications also reached a survey high of $313,000.

Refinance volume was up 5 percent last week. Applications for home purchases rose 2 percent higher for the week and, and they’re about 4 percent higher than a year ago.

The MBA says mortgage volume remains 18 percent lower compared to the same week a year ago. Volume is mostly lower from a year ago due to a significant decrease in refinance applications from a year ago when interest rates were lower. Refinance volume is down 34 percent annually.

Source: “Borrowers Rush to Beat Rising Rates, Pushing Mortgage Volume 3.3% Higher,” CNBC (March 8, 2017)

© Copyright 2017 INFORMATION, INC. Bethesda, MD


Existing-Home Sales Stumble in July

August 25, 2016
Call today to get more information on the market in Celebration. 321-939-1300. Kathy can do a free market analysis of your home if you are thinking of selling.
Slowed by frustratingly low inventory levels in many parts of the country, existing-home sales lost momentum in July and decreased year-over-year for the first time since November 2015, according to the National Association of REALTORS®. Only the West region saw a monthly increase in closings in July.
Total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, fell 3.2 percent to a seasonally adjusted annual rate of 5.39 million in July from 5.57 million in June. For only the second time in the last 21 months, sales are now below (1.6 percent) a year ago (5.48 million).
Lawrence Yun, NAR chief economist, says existing sales fell off track in July after steadily climbing the last four months. “Severely restrained inventory and the tightening grip it’s putting on affordability is the primary culprit for the considerable sales slump throughout much of the country last month,” he says. “Realtors® are reporting diminished buyer traffic because of the scarce number of affordable homes on the market, and the lack of supply is stifling the efforts of many prospective buyers attempting to purchase while mortgage rates hover at historical lows.”
 
Home sales are still expected to finish the year at their strongest pace since the downturn, thanks to a very strong spring,
 
According to Freddie Mac, the average commitment rate for a 30-year, conventional, fixed-rate mortgage dropped from 3.57 percent in June to 3.44 percent in July. Mortgage rates have now fallen five straight months and in July were the lowest since January 2013 (3.41 percent). The average commitment rate for all of 2015 was 3.85 percent.

Baby boomers chart new direction in housing

August 23, 2016

NEW YORK – Aug. 22, 2016 – Economists are having a tough time figuring out what housing market moves baby boomers will make next. Americans over the age of 55 are veering from previous generations, opting not to retire but instead launching second or even third careers. They are shunning the traditional patterns of retirement, and that could have a big impact on their housing choices, according to a Freddie Mac Insight report.

Baby boomers are a critical piece to the housing market puzzle. Americans over the age of 55 make up a quarter of the population and control about two-thirds of the single-family home equity in the nation. Sixty-five-year olds who, on average purchased a home 35 years ago now tend to have a home value that is likely 3.7 times the purchase price.

Nearly a quarter of baby boomers recently surveyed by Freddie Mac say they need major renovations in their current home in order to stay there as they age – and many say they face financial constraints to take on those remodels. And some of the baby boomers may be underestimating the financial costs of outfitting their home with age-in-place features, says Sean Becketti, Freddie Mac’s chief economist.

As a result, about 18 million homeowners over the age of 55 may be shopping for another house in the next few years, according to the Insights Report.

Unlike earlier generations, however, baby boomers’ main reasons to move aren’t due to downsizing. Instead, the survey showed the key influences making these generations move are: Affordability of the community, the need for retirement amenities and a home with less maintenance.

Bottom line, the authors note: The 55-plus population is likely to be an active part of the housing economy for years to come still.

Source: “Boomers Ignoring Conventional Housing Wisdom,” Mortgage News Daily (July 19, 2016)

© Copyright 2016 INFORMATION, INC. Bethesda, MD


2016 International Profile

August 23, 2016

International Homebuyers


Brexit spurs international interest in U.S. Commercial Real Estate

July 13, 2016

NEW YORK – July 12, 2016 – As the fallout from Brexit continues to stir market volatility, many international investors seek the security and economic stability of the U.S. commercial real estate market. Coupled with low interest rates for loans, brokers who belong to the CCIM (Certified Commercial Investment Member) Institute are seeing an increase in global activity in commercial real estate investments from primary gateway cities to tertiary markets.

The CCIM Institute is one of the largest international networks of commercial real estate professionals.

“The trend of Foreign Direct Investment (FDI) net inflows of capital toward the U.S. commercial real estate market will remain strong and the Brexit initial ripple effect for demand in the U.S. will initially increase as investors seek security,” says Kamil Homsi, CCIM, president of Global Realty Capital LLC in New York City. “Additionally, I see the demand increasing constantly to acquire senior and student housing, self-storage portfolios, and medical facilities across all regions.”

Interest rates in the U.S. are likely to remain low, and U.S. benchmark yields hit record lows last week. According to the U.S. Department of the Treasury, the 30-year Treasury yield plunged to a record low of 2.098 percent before recovering to 2.12 percent. And the 10-year Treasury closed below 1.4 percent for the first time, falling to 1.367 percent.

The continuing European market uncertainty, declining British pound and strengthening of U.S. dollar make it less likely that the Federal Reserve will move rates up or take other tightening measures this year. That has far reaching implications for U.S. commercial real estate markets.

“Commercial office space is often the preferred investment for overseas investors,” says Ernest Brown IV, CCIM, broker at Rohde Ottmers Siegel Realty in San Antonio, Texas. “But we also are seeing an increase in demand for well-located newer industrial assets for warehousing, distribution and service.”

The historic stability and low volatility, even within the presence of low cap rate markets, will continue to drive foreign investment into the U.S. commercial real estate market. This will drive up prices and lower cap rates for commercial buildings in several cities according to Reis Analytics. Primary gateway cities including New York City, Los Angeles, San Francisco and Boston will see the most impact, but secondary and tertiary markets also stand to see increased activity because investors have yet to drive up prices.

“Shortly after Brexit, I received several calls from international investors seeking more information about Texas commercial real estate,” says Jim Young, CCIM, broker at Longbow Real Estate Group in Austin, Texas. “In addition, several U.K. investors tell me that they see U.S. commercial real estate as a safe haven. Given low interest rates on commercial real estate loans and commercial rental rates in Central Texas that continue to rise, there will be even more of an uptick in European and global investor activity.”

While some U.S. assets may be sold to shore up assets held in Great Britain and elsewhere by foreign investors, the long-term goal is the safety of the investment. Historically, foreign investors rarely take their capital out of the U.S. commercial real estate market unless there is a major drop in valuation within European gateway cities. This is unlikely due to limited available inventory, time needed and European Union exit tax complexities.

Brexit further complicates the matter with increased uncertainty.

“Investments in the U.S. will only get stronger as a result of these factors,” says Eric Rutherford, CCIM, broker at Wright Kingdom in Boulder, Colo. “Individuals in the European market may take a risk and reinvest, but I just received word from a group of investors pouring $10 million into the U.S.”

The U.S. has always been a safe haven for global investors. With the continued repercussions of Brexit yet to be fully realized, many foreign investors actively seek to reposition their assets to a stable economy. The increased activity in U.S. commercial real estate properties by global investors looks to continue.

© 2016 Florida Realtors®

 


Americans Are Feeling Wealthier, More Upbeat

June 17, 2016

Fannie Mae’s Home Purchase Sentiment Index zoomed to an all-time high in May as consumers get more upbeat about their paychecks and home selling. In May, the index reached a reading of 85.3, which follows an 18-month low reached in March.

Three of six components the index measures registered increases last month, led by a 7 percentage point increase in the number of consumers reporting significantly higher income than a year ago. Also, the number of consumers who expect home prices to increase over the next 12 months rose 5 percentage points. Consumers were also upbeat that mortgage rates would decrease over the next year as well.

That said, the index indicator on whether it’s a “good time to buy” dropped 1 percentage point to an all-time survey low in May.

“Continued home price appreciation has been squeezing housing affordability, driving a two-year downward trend in the share of consumers who think it’s a good time to buy a home,” says Doug Duncan, senior vice president and chief economist at Fannie Mae. “The current low mortgage rate environment has helped ease this pressure, and fewer than half of consumers expect rates to go up in the next year. While the May increase in income growth perceptions could provide further support to prospective home buyers as the spring/summer homebuying season gains momentum, the effect may be muted by May’s discouraging jobs report.”

Here’s a closer look at additional findings from Fannie Mae’s latest index reading:

  • 29 percent of Americans say now is a good time to buy a home, a drop of 1 percentage point from March and an all-time survey low for the second consecutive month.
  • 52 percent of consumers believe now is a good time to sell a home – an all-time survey high.
  • 42 percent of Americans believe that home prices will go up.
  • 72 percent of Americans say they are not concerned with losing their job, a drop of 2 percentage points from March.
  • 18 percent of Americans say their household income is significantly higher than it was a year ago, up 7 percentage points from March and at an all-time survey high.

Source: Fannie Mae


Fla.’s recent housing success

June 7, 2016

NEW YORK – June 6, 2016 – Clear Capital’s Home Data Index (HDI) Market Report releases recent and granular data each month. The HDI Market Report provides insights into housing price trends and other leading indices for the real estate market at the national and local levels.

Florida’s markets continue to recover from the devastating lows of the housing market crash, and an increase in baby boomers provides key insight into the market’s future, according to Clear Capital.

Survey results

  • Regionally, the West continues to dominate quarterly growth as it hovers around a 1.1 percent quarter-over-quarter price increase, though that’s a downtick of 0.1 percent from last month. Growth rates in the South remain unchanged at 0.7 percent quarter-to-quarter growth, while Northeast and Midwest regional growth continues to lag behind the rest of the nation at 0.1 percent.
  • Nationally, quarterly market performance remains fixed at 0.6 percent with no change month-to-month.
  • The Seattle and Tampa MSAs tied for the top spot on the Highest Performing Major Metro Markets for June, each reporting a quarter-to-quarter price increase of 2.0 percent.
  • Tampa isn’t the only Sunshine State metro area to make the high-performers list. It also includes Orlando (1.7 percent quarterly price growth), Jacksonville (1.7 percent quarterly price growth), and Miami (1.4 percent quarterly price growth).

The most recent quarterly growth figures for the Floridian markets fit into a longer-term pattern of growth and recovery for the state, according to Clear Capital, and each major MSA has “experienced incredible gains since the market lows of 2011, recovering at least 30 percent or more of the individual market value.”

Jacksonville and Orlando home prices have increased 33 percent and 44 percent respectively; Tampa and Miami home prices have skyrocketed by almost 56 percent and 57 percent, respectively.

The baby boomer influence

Clear Capital compared Census Bureau data on baby boomer moves to the price increase from its index, calling the growth in both an “interesting phenomenon that may be contributing to the stellar price growth in the region.”

The most recent data from the U.S. Census Bureau indicates that this segment of the market – homeowners aged 55 to 74 – has increased more than 2.5X the overall population of homeowners in each of the top four Florida markets since 2011. In Miami and Jacksonville, the increase in homeowners of this generation is more than 500 percent greater than the overall increase in the total population of homeowners.

“It’s evident that the baby boomer demand for housing in the (price growth metro areas) is a significant contributing factor in the market’s overall success,” the report concludes. “In Orlando, the trend is quite similar as the ratio of baby boomer homeownership growth to overall homeownership growth is over 400 percent.”

“Florida has traditionally been regarded as prime real estate by those retirees who may be looking to migrate from colder areas of the nation such as the Northeast to a warmer and sunnier alternative for their golden years,” says Alex Villacorta, Ph.D., vice president of research and analytics at Clear Capital.

“As the top Floridian housing markets continue to grow and return impressive price gains – Tampa is currently reporting 12.2 percent annual price growth – it’s no surprise that this generation continues to invest in real estate in the region,” he adds. “The baby boomer share of homeowners is clearly on the rise here, and as more and more of this generation nears retirement age, Florida markets may be in for a boost in performance if tradition continues and retirees demand homes in the region.”

© 2016 Florida Realtors®