Weekly Mortgage and Real Estate Report – Week of November 19, 2018

ECONOMIC COMMENTARY
Thanksgiving Perspective

 

Thing are quieting down as we move into the Thanksgiving holiday. This is a great time for reflection as we all have a lot to be thankful for. It is also a time to look back to see how far we have come, as well as a look at what the future may bring. Regarding the future, the economic predictions for 2019 are already starting to roll in and we will spend some time reviewing these in the coming weeks. As we look back at how far we have come, it is interesting to note that the stronger economy and weaker real estate market we are now experiencing did not arrive overnight.

Today’s economy and real estate market are a product of a long and slow recovery from a very deep recession. For example, our economic growth has exceeded 2.0% six out of nine years since the recession and has never dropped below 1.5% during that time. It looks like this year will top 3.0% for the first time in over ten years–but that is not indicative of an overheated economy. Likewise, if you look at existing home sales, they have risen steadily since the recession from a low of just over four million to a high of just over 5.5 million. They have hovered between 5.25 and 5.6 million for the past five years. The small drop in housing sales will keep them towards the high end of that range. Certainly not a sign of a major slump.

Now that the economic recovery has matured, we don’t think that we can expect significant spikes in growth and that is probably a good thing, because that would cause rates to continue to rise significantly. The spikes we have had in the past years were due to temporary stimuli such as housing tax credits for first time buyers and the more recent tax cut. But we can’t do that every year with our budget deficit so high. So, let’s be thankful for the steady recovery we have and be hopeful that it continues for a few more years.

REAL ESTATE NEWS
 Financial experts are growing concerned by how millennials’ lack of homeownership will impact them financially when they retire. “Homeownership is one of the touchstones of being prepared for retirement,” Tamera Sims, research scientist at the Stanford Center on Longevity, told CNBC. “Buying a home at age 50 or 60 isn’t going to do you much good in funding a 30-year retirement.” But young adults are “not able to hit the [housing] market at the same age as their parents,” Sims says. Researchers found homeownership is falling the most among people under the age of 30 compared to previous generations. The homeownership rate among early millennials (those born between 1980 and 1984) at age 30 is 35.8 percent, according to the Stanford Center on Longevity. For comparison, the rate of homeownership among baby boomers at age 30 was 48.3 percent. Young adults are delaying marriage and having children and are loaded with student debt, all factors for their slow start at homeownership compared to previous generations. In 1960, the average age for men and women to get married was in their early 20s. The median age nowadays has slid closer to 30. A study in 2013 from the Urban Institute found that if a person delays buying a home to age 40 instead of age 30, that alone could result in a $42,000 loss in home equity by the time that person reaches age 60. Source: CNBCThe inventory crisis which is hampering home sales and growing demand from potential first-time buyers is starting to see improvement. Realtor.com’s September housing report shows an 8% rise in new listings year-over-year with inventory down just 0.2% from a year earlier. The year-over-year percentage rise in new listings was the highest since 2013. “After years of record-breaking inventory declines, September’s almost flat inventory signals a big change in the real estate market,” said Danielle Hale, chief economist for realtor.com® — “Would-be buyers who had been waiting for a bigger selection of homes for sale may finally see more listings materialize.” The US median home price was up 7% year-over-year to $295,000, marking a slower pace than the 10% annual rise of a year earlier. The 465,000 newly-listed homes in September were, on average, 8% cheaper ($25,000) and 10% smaller (200 sq. ft.) than existing inventory in the market. Source: realtor.com®

The US median home price increased just 4.8% in the third quarter of 2018, the slowest pace since the second quarter of 2016. The median sales price of a single-family or condo home in Q3 2018 was $256,000, 1% higher than in the previous three months. Almost half (74) of the 150 metros analyzed by ATTOM Data Solutions saw a slower rate of appreciation than a year earlier. The data showed that there were still plenty of markets posting double-digit gains, despite the overall slow-down. The average home seller in Q3 2018 gained $61,232 since purchase; a 32.3% return on the original purchase price. Distressed sales accounted for 11.6% of all US single family home and condo sales in Q3 2018, up from an 11-year low of 11.2% in the previous quarter but still down from 12.8% in Q3 2017. Source: ATTOM Data Solutions

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Weekly Mortgage and Real Estate Report – Week of November 12, 2018

ECONOMIC COMMENTARY
 How Did The Predictions Go? 

Though we are not in the business of predicting the future, it is sometimes very interesting to go back and see how forecasts play out after the fact. Especially when there is a lot of news happening during a short period of time. First, we had the jobs report released on November 2. The expectations were for an increase of just under 200,000 jobs after a weaker than expected 118,000 added in September (adjusted downward from 134,000 originally reported). The unemployment rate was expected to remain at 3.7%. The numbers came in at 250,000 and 3.7%, respectively. The general assessment was that the report was strong and more than offset the weak growth the previous month due to Hurricane Florence.

Just four days later, we had Election Day on November 6. The forecast was for a changeover in the House with status quo on the Senate side. This prediction was right on point. We also made the remark ahead of time that such a result would not change the divisions in Washington. We can’t comment on this prediction because it will take some time for this to play out; however, we are still not optimistic for improvement in this regard.

Finally, the Federal Reserve Board started their meeting the day after the election. The Fed was expected to keep rates the same for this month, but to continue to raise the possibility of a fourth increase in December. Again, this forecast was right on. Actually, the Fed announcement after the meeting did not seem to lower the probability of another hike in December. So, what was the reaction to all this news? Looking at the stock market as one indicator, stocks had a very volatile and down month in October, but started to rally as the month closed. Stocks continued that rally past election day, but paused after the Fed decision.

REAL ESTATE NEWS
 The Home Affordable Refinance Program, or HARP, is expiring on December 31, 2018. HARP was created in coordination with Fannie Mae and Freddie Mac to help homeowners with no equity or negative equity refinance their home loans. Since its inception in 2009, the program has put millions of people into more affordable home loans. Fannie and Freddie are each rolling out high loan-to-value programs that will fill the gap HARP leaves behind at the end of this year. Fannie’s program is simply known as the high LTV refinance option, while Freddie’s is called Enhanced Relief Refinance. HARP and these two new programs have some things in common as well as some important differences. A key distinction is that HARP was created in response to the financial crisis. Its mission was to fix a specific problem, whereas both of the new high LTV programs are designed to be a permanent refinance solution for eligible borrowers. As of October 2018, there were 49,000 HARP-eligible homeowners, according to the FHFA. In effect, thousands of people are potentially missing out on getting into less-expensive loans and building or rebuilding their home equity faster. These borrowers can’t count on the new Fannie and Freddie programs to help them because the qualifications are different. “Borrowers who don’t elect to refi under HARP, while the program is still available, may be missing a really great opportunity since it’s ending this year,” says Lauren Shepherd, project manager for HARP. Folks who qualify for HARP should talk to their financial advisor or lender about the benefits and risks of refinancing their home loan. If you’re a homeowner who took out a home loan after October 1, 2017 and owe more than your house is valued at, then you might qualify for the new Freddie or Fannie high LTV refinance option. Keep in mind, you must be up to date on your payments and the loan has to be at least 15 months old to be eligible. Source: BankRate.comThe best neighbors are trustworthy, quiet, friendly, and respectful, according to realtor.com®’s 2018 Good Neighbors Report (which is not affiliated with the National Association of Realtors®’ Good Neighbor Awards program). But there’s no need to maintain a close friendship to be considered a “good neighbor,” according to the survey of 1,000 consumers across the country. “While it’s true that some people focus on what annoys them about their neighbor, it’s a welcome surprise to see that people generally think positively of their neighbors,” says Nate Johnson, chief marketing officer at realtor.com®. “Trust and dependability play an integral part in helping a neighborhood feel like ‘home.’ Building it can be as easy as stopping by to say hello.” Millennials and Gen Z respondents (ages 18 to 34) and older adults (ages 55 and up) tended to care the most about having friendly neighbors, according to the survey. Researchers found the least appreciated quality for all groups, however, was having a close friendship with a neighbor. Only 9 percent of women see a close friendship with a neighbor as a must-have for a good neighbor; men rated it higher at 20 percent. Some of the most off-putting neighborly traits: Disrespectful of property, loud, untrustworthiness, and being nosy, messy, or unfriendly, the survey found. Welcoming new neighbors can create a “good neighborly” vibe, the survey found. The most common welcoming method preferred by 65 percent of respondents was just a simple introduction. However, the reality is that many new neighbors don’t get welcomed. Only 46 percent of respondents reported that their neighbors stopped by for a quick greeting, and 39 percent say they were never welcomed to the neighborhood. Source: realtor.com®

Consumers between the ages of 62 and 70 can earn up to 8 percent more in Social Security for every year they delay taking disbursements. Therefore, some homeowners in this age bracket are borrowing against their properties’ equity to fund their daily living expenses, hoping to push off taking Social Security benefits—a tactic some lenders even tout for retirees. But the Consumer Financial Protection Bureau warns that the costs and risks of such a financial strategy are too great. However, some financial experts say it’s a more plausible option than people may think. Jamie Hopkins, co-director of the American College’s New York Life Center for Retirement Income, wrote in a column for Forbes that the CFPB’s conclusion is wrong. “The CFPB’s analysis, misrepresentations, and inaccurate conclusions fail to provide a comprehensive review of potential benefits of Social Security deferral and proper use of home equity,” Hopkins wrote. “Instead, the report unleashed an overly broad and inaccurate censure that could hamper meaningful discussion.” Tom Dickson, an adviser at Reverse Mortgage Funding, told HousingWire that the organization still considers this a strategy for some retirees. “We found that while financial advisers are interested in the idea, they have a very, very, very difficult time persuading their clients to defer their benefit,” Dickson says. “It’s certainly a solid idea. It’s just that in the marketplace, it’s not one that advisers have had a lot of success with in terms of client adoption.” Source: HousingWire

Weekly Mortgage and Real Estate Report – Week of November 5, 2018

ECONOMIC COMMENTARY
It’s Election Day 

For right now let’s forget the fact that we just had a jobs report released and the Federal Reserve Board is meeting starting tomorrow. Today is Election Day. Our most important message to our readers today is to get out and vote. Our country is not perfect by any means, but on Election Day the fact that we can vote, and it means something, separates us from many other countries in the world.

Your vote will not change the world, but if everyone votes, our world becomes a little bit better. Did you know that in over 20 countries in the world, it is mandatory to vote? The fact that we have an option of voting is part of our freedom. On the other hand, voting is always a good idea — as well as your civic duty.

Now back to economics. Could the results of the election affect the markets? That is always a possibility, especially if there is a surprise. In a mid-term election, we will only have changes in administrations at the state level and in Congress on the federal level. Right now, the predictions are that control of the House may change, but that is not likely to happen in the Senate. We won’t try to predict the outcome, though we are not optimistic that the result will cause Washington to be less divided. On the other hand, hopefully, we will be pleasantly surprised.

REAL ESTATE NEWS
 Millennials want to own their own homes and rank it the most important priority apart from being able to retire. A new survey from Bank of America shows that 72% of 23 to 40 -year-olds say homeownership is their top priority, with retirement at 80%. Marriage (50%) and having children (44%) are far lower on the list. Millennials see owning a home as a sign of personal success (53%), financial success (45%), maturity and acting like an adult (47%), and independence (36%). Among renters, there’s an almost even split between those who think renting will be more expensive than homeownership long term, even though 69% believe their rent will increase each year or every other year. However, the dream of homeownership is being challenged by saving for a down payment (44%) or affording the home they want (23%). Almost half think they need a 20% down payment and almost a quarter think they need a perfect credit score to qualify. Almost two in five respondents plan to buy in the next 2-5 years with 57% of all first-time buyers planning to buy with a spouse or partner and 37% saying they plan to purchase their first home solo. Ninety percent of first-time buyers would rather pay more for their preferred location than be in a less desirable location with lower home prices and 45% are looking to stay within their current neighborhood, city, county or township/school district, while just one in five is planning to buy out of state. Source: MPA — Note: The average down payment for first time homebuyers is closer to 6.0%!It’s official, the housing market has cooled off, but it will take some time for it to become a buyers’ market. “Now we have seen several months of data that tells me the housing market is softening,” said Cheryl Young, a senior economist at Trulia. Existing home sales have peaked, according to Michelle Meyer, an economist at BAML, and a number of experts have adjusted their forecasts downward for key housing indicators, including home sales and single-family housing starts. Even home prices, which have been heading north, are rising at a slower clip. Last month, Freddie Mac said it expects home sales (existing and new) this year to come in below 2017. It projects total home sales to decline 0.9% to 6.07 million. “The spring and summer home buying and selling season ultimately ended up being a letdown, despite a faster growing economy and healthy demand for buying a home,” said Freddie Mac Chief Economist Sam Khater in a press statement. Meyer recently noted that existing home sales peaked in November 2017 at 5.72 million. Existing home sales remained unchanged in August, as rising rates and stagnant wage growth held back sales. New homes sales, a smaller portion of the market, recorded a small uptick of 3.5% but are still well below levels prior to the Great Recession. In previous housing cycles, a peak in existing home sales is usually followed by a peak in home price growth, according to Meyer, referencing the peak in existing home sales and home price growth in September 2005. But this time around that’s probably not going to be the case. “An outright contraction in home prices seems unlikely,” said Meyer, adding that she does think the rate of home price appreciation will slow. “Remember, this is not a normal market. The supply of homes on the market for sale has been quite low.” The number of homes for sale in the U.S. has fallen for three straight years, eight of the past 10 years, according to the National Association of Realtors. But relief may be on the way. Last month, the NAR said inventory appears to finally be leveling off — declining only 0.2% from a year ago. Source: Yahoo Finance

An analysis of data from the American Housing Survey by the Urban Institute has revealed some interesting information. Pets play a big part in home choices and with the millennial generation delaying marriage and having fewer children, pet ownership may become a bigger factor in the US housing market. The choices that people will make if they have pets – and if they have pets rather than children – may be different to traditional choices made at certain stages of life. The researchers uncovered trends from their research, including the fact that Americans are increasingly choosing pets over children. They found that only those households headed by 30-44 year olds were more likely to have children than pets. Pet ownership is 40-60% for households in their 20s through to 70s and peaks in their 40s. Plus, homeowners are more likely than renters to have pets – 57% vs. 37%. Source: The Urban Institute

Weekly Mortgage and Real Estate Report Week of October 29, 2018

ECONOMIC COMMENTARY
 Will Jobs Week Be Sweeps Week? 

It will likely be a very busy end of the year and this current period will significantly contribute to that forecast. Last week we had the first reading of economic growth for the third quarter and minutes released from the last meeting of the Federal Reserve Board’s Open Market Committee. Those minutes showed that the Fed is committed to their “gradual” rate increases, despite pressure from the Adminstration. This week we have a jobs report which will be the first reading of fourth quarter data and next week we have a little event called the “mid-term” elections in which the balance of power within Congress is up for grabs.

It is no wonder that the stock market has been extremely volatile in the past couple of weeks. Rising interest rates have been driving stocks downward, while excellent corporate earnings reports have been providing quite a lift. Corporate profits are up this year, not surprising with the economy strong. We seem to be experiencing a tug of war–one that has actually kept the markets’ overall progress fairly limited this year.

We believe that we will know a lot about where the economy stands by the end of the fourth quarter. Some are predicting a slowdown in 2019, as the economy starts to run out of steam after a long run. Higher interest rates and the waning effects of tax reform are cited to buttress that position. On the other hand, additional prognosticators are predicting that the economy still has the steam to grow at a good pace for another few years. It will be interesting to see how a busy fourth quarter may affect these forecasts.

REAL ESTATE NEWS
 Homebuying dreams can become real for shoppers in unmarried but committed relationships. According to Jessica Lautz, the National Association of Realtors®’s Director of Survey Research and Communication, a report from NAR found that the highest share of first-time buyers who are unmarried couples was in 2017—the highest on record since 1981. Of course, there are significant risks when buying a home with an unmarried partner. But there are precautionary steps you can take to ensure you can deal with the posed risks throughout the home planning and shopping together.

  1. Sign a prenup for the home. Renee Bergmann, a real estate attorney and owner of Bergmann Law in Westmont, N.J., says couples must have a conversation about potentially breaking up if they want to be co-homeowners. Using help from a legal professional, she says coupled clients should establish a co-ownership contract before closing day. Do not “wait and see what happens”—without a written agreement, Bergmann says, things could get messy very quickly.
  2. Choose the right title. Ownership titles are different in various states, but usually these titles include: sole ownership (one person has the full ownership), joint tenancy (a 50-50 split ownership, with one tenant’s share transferring to the other in the case of death), and tenants in common (allows unequal ownership, such as a 75-25 split). All three approaches have pros and cons, but Bergmann says your clients should consider revising the deed to reflect their new legal status, using a “quitclaim deed,” if they decide to get married after buying. Source: Seattle Times

Home improvements to boost energy efficiency can be a good investment that can reap rewards for both buyers and sellers. But the Appraisal Institute, which represents professional real estate appraisers, says not all improvements will bring the same benefits. “The latest research shows that green and energy-efficient home improvements have the potential to pay dividends for buyers and sellers,” said Appraisal Institute President James L. Murrett, MAI, SRA. “However, it depends on the improvements made. Some green renovations, such as adding Energy Star appliances and extra insulation, are likely to pay the homeowner back in lowered utility bills relatively quickly.” The Institute says that homeowners may be eligible for a federal tax credit if they opt for an energy-efficient product or renewable energy system for a home. Murrett says there is a difference between a truly green home and one with green features. To be green it must contain all six elements of green building: site; water efficiency; energy efficiency; indoor air quality; materials; and operations and maintenance. He also says that homeowners should keep all documentation relating to construction for real estate agents, appraisers and buyers; and that buyers chose lenders that have knowledge of high-performance homes. “Builders and homeowners should collect and share with appraisers data about cost and benefits of green building materials and energy-efficient features to establish historical data regarding return on investment of green construction,” Murrett said. Source: Mortgage Professional America

Weekly Mortgage and Real Estate Report – Week of October 22, 2018

ECONOMIC COMMENTARY
  More Inventory on the Horizon? 

For the first time in several years, the real estate market is a lagging part of the economy. For some time, the real estate market has led the economy forward, but in the past year or so, the economy has outshined the real estate sector. In most times a stronger economy helps real estate, but this market is a bit different than most. Real estate’s recovery from the recession was fueled by record low interest rates.

And though it is not unusual for rates to rise as the economy gets better, today’s rates seem higher than they are in reality. Rates are lower now than they have been for most of the past three decades, but consumers have become used to unbelievably low rates. On the other side of the equation, home prices have risen even with slower home sales because there has been a lack of inventory. Together with rising rates, higher home prices have increased homeownership costs. Now it appears as though inventory levels are rising in certain sections of the country, while at least stabilizing in other areas.

What will more inventory mean? With higher rates and more inventory available, this should mean that the rise of home prices might slow down. Consumer rents also have risen steadily for the past several years. Higher interest rates will continue to contribute to the higher cost of renting, even if home price growth slows. After all, rent money goes to pay the landlord’s loan. What could halt the rise in rates? If higher rates also cause the broader economy to slow, in addition to the real estate sector, that could do the trick. Stocks have been very volatile lately and that could be a warning sign that the cooling is about to begin.

REAL ESTATE NEWS
 It hopefully just got a little more difficult for scammers to abuse someone’s credit information, because consumers can now freeze their credit at all three of the major credit reporting agencies, for free. Last year, in the wake of the massive data breach at Equifax, which exposed the personal information of more than 145 million consumers to hackers, a push began to stop allowing the credit reporting agencies to charge to freeze someone’s credit. Each state has different rules around credit freezes, but in some states, it costs $10 to place a credit freeze on their account and another $10 if they want to lift the freeze. Not anymore though. Going forward, consumers can freeze their credit for free at Equifax, TransUnion, and Experian. A credit freeze prevents lenders or other credit providers from opening a new account without a consumer unfreezing their credit. The change was actually put in place by the Economic Growth, Regulatory Relief, and Consumer Protection Act signed into law earlier this year. According to the Federal Trade Commission, consumers can now freeze and unfreeze their credit for free. The law also allows parents to freeze their children’s credit for free (applies to children under 16), and guardians, conservators, and those with a valid power of attorney can also get a free freeze for their dependents. Additionally, fraud alerts placed on a consumer’s credit file will be extended from 90 days to one year. A fraud alert requires businesses that check a consumer’s credit to get the consumer’s approval before opening a new account. Consumers must contact each of the three major credit agencies independently to place a credit freeze on their accounts. Source: HousingWireSeventy-seven percent of consumers say they believe now is a good time to sell a house—a record high. That’s according to new findings from the National Association of Realtors®’ latest quarterly Housing Opportunities and Market Experience survey. Fifty-three percent of survey respondents say they believe home prices will continue to increase in their communities over the next six months. “Though the vast majority of consumers believe home prices will continue to increase or hold steady, they understand the days of easy, fast gains could be coming to an end,” says Lawrence Yun, NAR’s chief economist. “Therefore, more are indicating that it is a good time to sell, which is a healthy shift in the market.” Consumers are also upbeat about the direction of the economy, which may be making them feel wealthier and more willing to sell. But optimism seems in higher supply for Americans who are already relatively well-off. Households with incomes of more than $100,000 are more likely to view the economy as improving (67 percent) than those with an income of $50,000 to $100,000 (64 percent) and under $50,000 (49 percent), the survey showed. Source: National Association of Realtors®

More new homes are coming equipped with front porches. Sixty-five percent of new single-family homes started in 2016 included a porch, according to a Census data analysis from the National Association of Home Builders. It’s only the second time since tracking began that new single-family homes with porches have moved back above 65 percent. For comparison, in 2005, 54 percent of new homes had porches. The Annual Builder Practices Survey, conducted by Home Innovation Research Labs, shows that front porches on new homes tend to be more common than side porches. Also, most new home porches are open rather than screened. The average size of a front porch on a new home is about 60 square feet, according to the report. The materials used often tend to be concrete and treated wood. Source: The National Association of Home Builders

Weekly Mortgage and Real Estate Report – Week of October 1, 2018

ECONOMIC COMMENTARY
  From the Fed to Jobs

 

The end of the quarter is especially busy when the Federal Reserve Board schedules its meeting at the same time. We are just days past the Fed announcement to raise short-term rates by 1/4 of one percent and a confirmation of strong economic growth for the second quarter. In addition, at the end this week we get a reading of the employment numbers for September. All that news should keep the market analysts very busy. Not that the Fed announcement was a surprise to anyone.

What the analysts were looking for is a hint as to whether we might get another increase by the Fed this year. The Fed’s announcement accompanying their rate increase was anything but clear with regard to the pace of future rate increases. They continue to use the word “gradual,” but as members of the Fed have said several times, things could accelerate if there are signs of rising inflation or imbalances in the financial markets. Of course, things could slow down if other factors come into play.

The next three jobs reports, starting with the end of this week, will go a long way to provide evidence to the Fed. They will be looking at more than the unemployment rate and jobs created. They also will be looking at the labor participation rate and any signs of wage inflation. But the employment numbers are only part of the picture. The strength of the markets will also be a factor. If we have a strong stock market in the fourth quarter, this could help tip the scales toward another increase.

REAL ESTATE NEWS
 By 2020 the US housing market will favor buyers but until then sellers will remain dominant according to an analysis by Zillow. Its quarterly Home Price Expectations Survey was conducted by Pulsenomics and asked more than 100 real estate economists and experts for their predictions. The last few years have been marked by low inventory and escalating prices, putting sellers in the driving seat, but the largest consensus share (43%) of respondents believe buyers will take control in 2020. “For the past several years, home sellers held all the cards at the negotiating table, fielding multiple offers while buyers faced stiff competition and a fast-moving market,” said Zillow Senior Economist Aaron Terrazas. “Conditions are starting to show signs of easing up, but the effects of years of limited construction still linger.” The experts also gave their views on home prices with an expectation of 5.9% rise for 2018. Source: ZillowThe rate of home flipping in the U.S. plunged almost to a four-year low in the second quarter as the number of distressed or low-priced homes dropped, according to a new report by real estate data firm ATTOM Data Solutions. A flip is defined as a home that has been sold more than once in a 12-month period. A total of 48,768 single-family homes and condos were flipped in the second quarter, comprising about 5.2 percent of all sales. That is down from 5.4 percent a year ago. “Fewer distressed sales are limiting the ability of home flippers to find deep discounts even while rising interest rates are shrinking the pool of potential buyers for flipped homes,” says Daren Blomquist, ATTOM’s senior vice president. “These two forces are squeezing average home flipping returns, pushing investors to leverage financing or migrate to markets with more distressed discounts available to achieve more favorable returns.” Homes flipped in the second quarter sold for an average of $65,520 more than what the investor had purchased the home for, according to ATTOM Data Solutions. That’s down from an all-time high average gross flipping profit of $69,500 in the first quarter. Out of the homes flipped during the second quarter, 32.3 percent were purchased through a distress sale, a home either in foreclosure or a bank-owned home. The first quarter of 2010 saw a peak in distressed sales purchased by home flippers at 68.2 percent. Sources: ATTOM Data Solutions

Home buyers looking to escape city living can find similar neighborhood attributes in the suburbs and exurbs. Homes in both areas tend to offer more square footage, less noise, less pollution, and more privacy. But there are a few distinct differences between the suburbs and exurbs as well. The location is the key difference. Suburbs lie just outside of the city; exurbs are farther out and tend to be in more rural areas, according to Realtor.com®. “Suburbs provide a functional lifestyle close to shopping, schools, and transportation,” says New York-based real estate broker John McSherry. “Exurbs provide a remote location free from noise and congestion.” The suburban housing market has seen significant growth in recent years, according to research from the Urban Land Institute. The overflow of residents from the city to the suburbs continues to accelerate, and many suburbs are expanding outward. As the growth in major metro areas extends, suburbs and exurbs will naturally be absorbed, becoming their own incorporated entity or merging with a nearby municipality, predicts Dave Hyman, a RE/MAX real estate pro in Encinitas, Calif. “Even as cities expand, new suburbs and exurbs, beyond the current ones, will naturally come into being,” he says. Source: Realtor.com®

Weekly Mortgage and Real Estate Report – Week of September 24, 2018

ECONOMIC COMMENTARY
  Fed Meets Today

 

Let us assume that the prognosticators are correct, and the Federal Reserve Board will hike short-term rates by one-quarter of one percent when they finish their two-day meeting tomorrow. What questions does that leave us with? For one, will the Fed’s announcement also give us a hint about whether there will be a fourth rate increase next year? Secondly, what kind of surprise could the Fed have in store?

Surprises could consist of the Fed not hiking rates or moving rates by one-half of one percent instead. There is no way to predict how the markets would react to either surprise and these hypotheticals are not likely if you believe most market analysts. How would the markets react to the expected increase? Typically, we see long-term rates moving up several days or a few weeks before the meeting. That has already happened. Then rates move down a bit as the meeting approaches or right after the announcement. Markets often move in anticipation of an event.

Where do we go from here? The Fed’s announcement may or may not give us a clue. Thus far we have had no indication that the Fed feels that we are close to neutral range with regard to short-term rates. The economic news from now and November or December will give the Fed enough clues as to whether to act again or hold off. Next week we have another jobs report and that data will be an important factor the Fed considers. Other than the real estate market, most areas of the economy continue to be moderately strong.

REAL ESTATE NEWS
 It’s been a decade since the onslaught of the Great Recession, and the housing market has healed and changed drastically since then. Home prices in many markets have hit record highs—beating their prerecession levels—and foreclosure rates are historically low, according to the National Association of Realtors®. Stronger lending and regulatory reforms in recent years also have prevented the formation of another housing bubble, says NAR Chief Economist Lawrence Yun. “Over the past 10 years, prudent policy reforms and consumer protections have strengthened lending standards and eliminated loose credit, as evidenced by the higher-than-normal credit scores of those who are able to obtain a mortgage and near record-low defaults and foreclosures, which contributed to the last recession,” Yun says. “Today, even as interest rates begin to increase and home sales decline in some markets, the most significant challenges facing the housing market stem from insufficient inventory and accompanying unsustainable home price increases.” Though inventory shortages continue to plague many housing markets, Yun believes some of the nation’s most overheated will see sales slow down. Many of these markets are experiencing rising prices because of insufficient supply, not due to weak buyer demand, he says. New construction rose 7.2 percent year over year in July, but Yun says that even more is needed to fill national shortages. Yun forecasts that existing-home sales will increase 2 percent in 2019, and home prices will rise by 3.5 percent. Source: National Association of Realtors®Home buyers want the home loan process to be less onerous and faster. But they also want more personal interaction as they navigate a transaction and very big decision in their life, according to Fannie Mae’s National Housing Survey, a survey of about 3,000 recent home buyers. “As the Amazons and Ubers of the world continue to raise the bar for ‘consumer-grade’ experiences, home buyers have made it clear that it’s also time for the home purchasing and mortgage processes to change,” writes Henry Carson, senior vice president of digital products, at Fannie Mae’s Perspectives blog. Overall, borrowers say they want less paperwork. They said gathering the necessary financial information to apply and get approved for a loan is the most difficult part of the mortgage process, which was particularly true for those over the age of 45 or those who’ve purchased more than one home in their lifetime. Respondents were asked whether they would prefer a fully digital process, where every step could be completed online. The majority said they would be “somewhat” or “very” interested. They do like the idea of a digitizing the application if it would speed up the process. The majority of home buyers surveyed said they’d like to see the process—from application to closing—completed in one month. That is five days less than the current median process takes, which averages about 35 days, Carson notes. But home buyers still want personal interaction in the process too. They noted they want personal interaction in the review of final loan documents and understanding terms and options. Source: Fannie Mae

Snooping online proves to be an easier way of finding out what a homeowner paid for a property. A recent poll of more than 500 homeowners found that 52 percent of respondents admit they have spied online to track how much friends and family paid for their houses, according to a poll by Branded Research. Homeowners say they are simply curious what someone else paid for a property, how much it’s worth currently, and how much is paid in taxes. Many real estate sites offer a place where you can plug in an address to see a home’s worth and often even more information. Certain age groups are more likely to snoop than others. Seventy-six percent of survey respondents between the ages of 35 to 44 admitted to checking out their friends’ real estate deals online. Seventy-two percent of respondents ages 25 to 34 admitted to snooping. The least likely to snoop are homeowners aged 65 and up. Just a quarter of that age group said they checked out what their friends paid online. Source: Realtor.com®