Weekly Mortgage and Real Estate Report – Week of July 11, 2016

ECONOMIC COMMENTARY
Stocks, Rates and Jobs DataBrexit? No problem for our Teflon stock market. It took only a few days for our stock market to recover from the Brexit shock. We talked previously as to how resilient our markets have been. The next question: Will the markets use the momentum from this recovery to move past the levels we have seen for over a year?

Meanwhile, we ended last week’s commentary by referring to the hope that “rates stay low.” When we look back at that statement, it is almost laughable. Rates were low before they came down even further in response to Brexit. In perspective, from 1971 to 2008, a period of 37 years, the Freddie Mac rate survey never showed 30-year fixed rates below 5.0%, with the average closer to 7.0%. Today’s rates are close to half of this average rate. So we perhaps should say, “if rates stay ridiculously low.”

This week we had economic news which finally took some attention away from Brexit. June’s job numbers came in well above expectations, with 280,000 jobs added for the month. Ordinarily this strong jobs report would cause rates to surge higher, but when you look at the numbers in perspective, they were not quite as strong as they appear because it was a bounce back from virtually no job growth the previous month and the unemployment rate ticked up a bit to 4.9%. A higher unemployment rate at the same time that we had major jobs growth means that more Americans have reentered the job market, which is actually a good long-term sign. The bottom line? For now, the job market remains strong, but the long-term effects of Brexit have not been felt. Thus the markets are still expecting no action with regard to the Federal Reserve raising rates when they meet in a few weeks.

REAL ESTATE NEWS
 In a seller’s market, home buyers need to be willing and able to act fast to snag the home they want. This summer, areas across the country are facing a limited number of homes for sale. Realtor.com® offers up a cheat sheet for surviving a seller’s market.

  • Be on call. “If you’re only looking now and then when it’s convenient, you’re probably wasting your time,” says James Malmberg, a real estate professional in Sherman Oaks, Calif. He suggests treating house hunting like job hunting. If someone calls with a lead, follow up promptly to gauge whether it could be a good fit and don’t linger.
  • Bring the paperwork. To be taken seriously, buyers would be wise to get a mortgage pre-approval letter as well as a “proof of funds” form from their bank to show they have enough to cover a down payment. They’ll be able to act quicker when they do find the right house.
  • Limit the contingencies. In a seller’s market, buyers may need to drop some of the contingencies to score the house. Sellers prefer the fewest number of hurdles to closing as possible. If your buyers come in with several contingencies — such as “if” they secure financing — the sellers are more inclined to bypass their offer and take another with less hassle. Also, “don’t waste your time lowballing a seller,” advises Sean Kelley, a real estate professional with Howard Hannah in Pittsburgh, Pa. “Always put in an aggressive offer.”
  • Cast a wide net. Search for homes outside prime locations if faced with limited or high-priced choices. Buyers need to carefully consider what they’re willing to compromise on. “Sometimes properties sit, even in a seller’s market, because of a problem that is scaring other buyers away,” such as some renovation work that may need to be done, Malmberg says. Those “flaws,” however, might not be a big deal to your buyers. “Finding a house this way can also cut down on the amount of competition you will face,” Malmberg adds. Source: realtor.com

Millennial home ownership levels may still be low for now, but that is expected to change in three years. Fifty-three percent of nearly 6,000 millennial renters, age 18 to 34, say they expect to buy a home, but plan to wait until after 2018, according to Apartment List’s Apartment List Renter Confidence Survey. Only 25 percent of those surveyed say they expect to buy a home in the next two years. Age and marital status will play a big role on when they jump into home ownership, the survey found. Older millennials, those age 25 to 34, say they plan to buy sooner than younger millennials, age 18 to 24: 54 percent of older millennials plan to buy within the next three years compared to only 37 percent of younger millennials. What’s more, 52 percent of married millennials plan to buy within the next three years compared to 41 percent of unmarried millennials. Millennials earning between $30,000 and $60,000 plan to buy at a 15 percent higher rate than those making less than $30,000, and those making over $60,000 have a 25 percent higher rate, the survey shows. “Millennials are projected to be larger than the boomer generation this year, and currently only 34.6 percent of Americans under age 35 are home owners,” says Andrew Woo, data scientist at Apartment List. “While millennial home ownership rates are low today, our study found that nearly 3 out of 4 millennial renters (74%) plan to buy a home in the future. … The future housing decisions of millennials will have a major impact on the economy.” Source: Apartment List

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s