Category: Real Estate

Loan Demand Stalls in Volatile Week | Realtor Magazine

The highest mortgage rates in four years caused a pause in mortgage applications from home buyers and refinancers during a time when the market generally starts picking up in preparation for the spring season. Any shakeout from dips in the stock market in recent days will become more evident in mortgage demand in next week’s report from the Mortgage Bankers Association.

Total mortgage application volume last week—which reflects home purchases and refinancings—barely budged at 0.7 percent higher on a seasonally adjusted basis compared to one week earlier, the MBA reported Wednesday. A hopeful sign for housing, however: Volume is still 5 percent higher than the same week a year ago.

Purchase applications were mostly unchanged last week while applications to refinance eked out a 1 percent gain during the week, the MBA reports.

The average 30-year fixed-rate mortgage was 4.50 percent, the highest level since April 2014, the MBA reports.

“While the stock market leapt into the new year with strong gains, only to give it all back over the past few days, interest rates have generally moved higher, with the 10-year Treasury and 30-year mortgage rates about 30 basis points higher than where we started at the beginning of January,” says Mike Fratantoni, the MBA’s chief economist. “A strong job market, accelerating wage growth, and expectations of faster rate hikes from the Fed all have played roles in pushing up longer-term rates.”

At the start of this week, mortgage rates did recede slightly after volatility in the stock market sent investors flocking back to the bond market, CNBC reports. Mortgage rates loosely follow 10-year Treasury yields.

Mortgage Rates Keep On Pressing Higher | Realtor Magazine

 

 

The 30-year fixed-rate mortgage reached its highest average since December 2016, Freddie Mac reports. This is the fifth consecutive week that mortgage rates have been on the rise, increasing borrowing costs for home shoppers heading into the spring buying season.

“Following a turbulent Monday,financial markets settled down with the 10-year Treasury yield resuming its upward march. Mortgage rates have followed,” says Len Kiefer, Freddie Mac’s deputy chief economist. “Will higher rates break housing market momentum? It’s too early to tell for sure, but initial readings indicate housing markets are sustaining their momentum so far.” 

Freddie Mac reports the following national averages with mortgage rates for the week ending Feb. 8:

• 30-year fixed-rate mortgages averaged 4.32 percent, with an average 0.6 point, rising from last week’s 4.22 percent average. Last year at this time, 30-year rates averaged 4.17 percent.
• 15-year fixed-rate mortgages averaged 3.77 percent, with an average 0.5, up from a 3.68 percent average last week. A year ago, 15-year rates averaged 3.39 percent.
• 5-year hybrid adjustable-rate mortgages averaged 3.57 percent, with an average 0.4 point, increasing from last week’s 3.53 percent average. A year ago, 5-year ARMs averaged 3.21 percent.

Could the Inventory Crunch Worsen? | Realtor Magazine

Housing permits, a gauge of new-home activity, slipped in the final quarter of 2017, which could worsen a housing shortage already shaking many markets across the country.

Single-family permits are running at only 56 percent of normal activity, according to the National Association of Home Builders/First American Leading Markets Index.

“We are concerned with the sluggish permit activity,” says Robert Dietz, chief economist at the National Association of Home Builders. “The weak permit numbers indicate that builders may be hesitant to start projects as they contend with supply-side hurdles, such as rising material prices and labor shortages.”

Permit levels are at or above normal in only 62 of the 337 metro areas tracked in the NAHB/First American Index, which is a drop of 7.5 percent compared to the third quarter of 2017.

Despite sluggish permits, the index showed that many markets are showing a stronger recovery in their economy and home prices. Housing markets in 195 of the 337 metro areas tracked nationwide returned to or exceeded their last normal levels of economic and housing activity in the fourth quarter of 2017. The LMI measures three components: housing permits, employment, and home prices.

Employment is at 98 percent of normal activity, while home price levels are well above normal at 158 percent. Single-family permits were the only of the three components to see a decline in the fourth quarter of 2017.

Overall, the index shows the fastest-growing new-home metro areas are in the South and West, says NAHB Chairman Randy Noel.

The major metros scoring the highest on the LMI—meaning they are performing at the highest levels compared to their historic normal market level—are Baton Rouge, La.; Austin, Texas; Honolulu; Oxnard, Calif.; and Provo, Utah. Among smaller metro areas, the metros scoring the highest in besting their own previously normal market levels are: Odessa, Texas; Midland, Texas; Walla Walla, Wash.; Florence, Ala.; and Gadsden, Ala.

Housing in 2018: San Jose neighborhoods top `hot’ list

• Katy Murphy
• PUBLISHED: January 29, 2018 at 10:34 am | UPDATED: January 30, 2018 at 11:43 am
• Categories: Business, California News, Latest Headlines, News, Real Estate

 

The last is in San Francisco.

Redfin experts say that’s largely because tech workers, even very well compensated ones, are getting priced out of the San Francisco Peninsula. Others are drawn by new jobs from companies such as Google and Apple — or by Google’s plans to build a downtown campus around San Jose’s largest transit hub, Diridon Station.

“While the San Francisco Peninsula has traditionally been the hottest of the hot places, we’re seeing it become unaffordable for even the tech giants that helped create its demand in the first place,” said Redfin Silicon Valley agent Kalena Masching.

Compared to Palo Alto, where the median sale price last year topped $2.5 million, and San Francisco, where the average home sold for $1.3 million, San Jose’s median home price of over $1 million (and rising) apparently looks like a deal.

Topping the list is San Jose’s Bucknall neighborhood, where the median sale price last year was $1.57 million and 100 percent of homes sold for above list price.

In recent weeks, Masching said, open houses have been swamped, homes have been getting 15 to 20 offers each, and people have taken off work to check out houses the moment they come on the market.

She’s also noticed something else: “What we’re seeing is a disregard for recent comparable sales and people deciding what the home is worth to them and just giving that as their offer.”

The demand for real estate in the South Bay has been well documented; late last year, Zillow predicted the San Jose metropolitan area would be the hottest housing market in the country in 2018. But that it landed nine neighborhoods out of 10 on Redfin’s latest list surprised even Redfin economist Nela Richardson.

The interest, she said, is fueled by a lack of housing supply throughout the Bay Area — and “speculative interest” in Google’s expansion. “Basically Google’s just extending its tentacles,” Richardson said, “and yet it’s having a dramatic effect on one city.”

Redfin created the list based on the increase in the number of homes marked as “favorites” in each area and the number of page views on Redfin.com.

As Redfin noted, this further uptick in interest will only put more pressure on the housing market.

In December, the San Jose area had the lowest rate of homes per sale that Redfin had ever recorded — anywhere in the country — and its home prices rose a whopping 31.9 percent from the previous year.

Rising Rates Cause Loan Demand to Teeter | Realtor Magazine

Mortgage rates were on the rise for the second consecutive week, causing some borrowers to show reluctance. Total mortgage application activity—which reflects both refinancing and home purchase demand—dropped 2.6 percent last week, the Mortgage Bankers Association reported Wednesday. Nevertheless, mortgage volume remains 6.6 percent higher than the same week a year ago.

“Rates moved higher last week driven by concerns over a weaker U.S. dollar, signs of more robust growth and rising rates abroad, and moderately strong fourth-quarter domestic growth,” says MBA economist Joel Kan.

Broken out, applications to refinance a home loan dropped 3 percent during the week, but are still 3 percent higher than a year ago. Refinancing applications tend to be more sensitive to rate changes than home buying applications. Applications to buy a home also dropped 3 percent last week, but remain 10 percent higher than a year ago.

The MBA reported that the average 30-year fixed-rate mortgage rate was 4.41 percent last week, the highest level since March. The 15-year fixed rate and the FHA rate were at their highest levels since 2011 and 2013, respectively.

KW: We’re Biggest Real Estate Franchise in U.S. | Realtor Magazine

Keller Williams Realty is calling itself the largest real estate franchise in the U.S. by sales volume and units sold, as well as the world’s largest franchise by agent count. The company reported the findings in its latest quarterly release, which included research into SEC filings, company websites, and industry reports to gauge its placement in the marketplace.

Keller Williams reported record agent production, owner profit, and profit shares in the fourth quarter of 2017, topping its own previous record set in 2016. KW agents closed 250,815 transactions and $73.2 billion in sales volume in the U.S., up 9 percent and 13 percent year over year, respectively. Profits for KW franchise owners in the fourth quarter were up 7 percent year over year to $39.9 million, and profit share reached $34.9 million.

Keller Williams has more than 156,500 associates in the U.S., up nearly 13 percent year over year. “We’re certainly excited for our people and their incredible increases in agent production and market share,” says Keller Williams CEO John Davis. “And we’re just getting started. We’re committed to continuing to raise the bar and providing even more value for agents and their clients.”

So far, 2018 looks like it could be another record-breaking year for the company. Its U.S. associates have taken 140,013 new listings in the first quarter of this year and have written 257,750 contracts. Keller Williams’ contract volume in the first quarter of 2018 reached $75 billion.

Housing Market Starts 2018 on Positive Note | Realtor Magazine

Contract signings on home sales rose slightly in December, reaching their highest level since last March, the National Association of REALTORS® reported Wednesday. NAR’s Pending Home Sales Index, a forward-looking indicator based on contract signings, moved 0.5 percent higher to a reading of 110.1 last month, 0.5 percent higher than a year ago.

“Another month of modest increases in contract activity is evidence that the housing market has a small trace of momentum at the start of 2018,” says Lawrence Yun, NAR’s chief economist. “Jobs are plentiful, wages are finally climbing, and the prospect of higher mortgage rates are perhaps encouraging more aspiring buyers to begin their search.”

But Yun cautions that these positive indicators won’t necessarily equate to a stronger sales pace in the long run: “Buyers throughout the country continue to be hamstrung by record-low supply levels that are pushing up prices—especially at the lower end of the market.” 

The imbalance in supply and demand in housing throughout the country prompted home prices to appreciate 5.8 percent in 2017, which marks the sixth consecutive year of gains at or above 5 percent, NAR reports. Yun does expect price growth to subside in 2018, with some states possibly experiencing a decline due to the changes in the impact of the mortgage interest deduction and state and local deductions under the new tax law. 

“In the short term, the larger paychecks most households will see from the tax cuts may give prospective buyers the ability to save for a larger down payment this year, and the healthy labor economy and job market will continue to boost demand,” Yun says. “However, there’s no doubt the nation’s most expensive markets with high property taxes are going to be adversely impacted by the tax law. Just how severe is still uncertain, but with homeownership now less incentivized in the tax code, sellers in the upper end of the market may have to adjust their price expectations if they want to trade down or move to less expensive areas. This could in turn lead to both a decrease in sales and home values.” 

Crucial Turning Point in Homeownership Rate | Realtor Magazine

For the first time in 13 years, the U.S. homeownership rate ticked up, and millennials are behind the long-awaited boost. The U.S. Census Bureau reported Tuesday that the rate increased to 64.2 percent in the fourth quarter of 2017, up from 63.7 percent a year prior.

The lion’s share of the boost came from younger Americans. The homeownership rate among households headed by someone under the age of 35 increased to 36 percent in the fourth quarter, up from 34.7 percent a year prior. It was the largest increase of any age group during that period. Millennials—projected to be the largest homebuying generation since the baby boomers—are entering the housing market after years on the sidelines and saddled with low wages, tight credit, and high student debt. The Census Bureau reported yesterday that the country added about 1.5 million new households over the past year and that renter households fell by 76,000—the second consecutive quarter of such declines.

The Wall Street Journal called the increase a “crucial turning point” and credited the federal government for loosening policies formed in the wake of the housing crash. The homeownership rate peaked at more than 69 percent in the mid-2000s, boosted by easy credit widely available during that time. But the housing crisis left many of those mortgages in default, ultimately costing banks billions in bad mortgages. That prompted banks to tighten credit and down payment requirements that made it more difficult for young people with thin credit histories and large student debt burdens to get a mortgage. By the second quarter of 2016, the homeownership rate had sunk to a 50-year low of 62.9 percent.

While the homeownership rate still remains below its long-term average of 65 percent, housing economists overall are upbeat. However, economists do caution that inventory shortages and rising home prices may jeopardize larger jumps in the homeownership rate.

Keller Williams Reigns as No. 1 Real Estate Franchise in the U.S.

n one of the most stunning David and Goliath stories in real estate history, Keller Williams has surged past industry giants like RE/MAX, Coldwell Banker, and Berkshire Hathaway HomeServices to become the number one real estate franchise in agent count, closed units, and closed sales volume in the United States*. In 2017, the company’s 155,000 U.S. agents closed more than 1 million units, generating more than $300 billion in sales revenue.

Continue reading Keller Williams Reigns as No. 1 Real Estate Franchise in the U.S. | #ProudToBePartOfKW #SiliconValleyAgent #YajneshRai

2018’s Housing Market Looks Good | Multi-Year Solid Predictions |

The nation’s housing market for 2018 continues to look good, according to two recently released reports. But first-time millennial buyers will continue to struggle with affordability, especially in high-priced areas like Los Angeles, San Francisco, Boston, New York and Washington DC.

Listen to Ralph G. DeFranco, Ph.D, global chief economist, Mortgage Services, Arch Capital Services Inc.: “With interest rates and home prices both on the rise, first-time homebuyers – largely millennials – may want to consider making the jump from renting to owning sooner rather than late.”

Median price for homes currently listed in Boston is $735,000, according to Zillow.com. (Shutterstock)

DeFranco further said: “Our research shows few signs of a housing bubble because the typical warning signs aren’t present. Overall, the shortage of housing paired with a robust job market should keep the housing market strong and growing, short of an unexpected event and despite the contrary pressures that may be created by the tax bill.”

 

Arch Mortgage Insurance Co. (Arch MI) recently released its winter 2018 edition of The Housing and Mortgage Market Review® (HaMMRSM), authored by DeFranco. The chart below looks at a 6.2% increase in home prices in 2017 compared with the year before.

ARCH Mortgage Capital Services

 

 

The HaMMRSM also makes market predictions to 2020. Among them: Home prices will continue to increase around the country in most markets. Look to annual increases of 2-6%, with most housing markets currently at low risk for a downturn.

Mortgage rates will rise, causing people to move less often. According to the report, “rising rates give existing borrowers with fixed-rate mortgages a financial incentive to stay put.” In addition, “homeowners will have more incentive to seek second liens or home improvement loans rather than move to a new home or refinance.” Makes sense since a new mortgage would likely be a higher rate cutting into the key affordability factor.

Realtor.com also released its “State of the Housing Union,” “which shows the strong U.S. economy and unprecedented housing shortage pressuring potential home buyers striving to attain the American Dream.” Realtor.com’s analysis pointed to the fundamentals. “Strong buyer demand, constrained inventory, and ready-to-buy first timers are the key underlying dynamics driving today’s housing market. The macro-factors that have defined real estate in recent years – strong demand and weak supply – continue to set the tone for the industry,” said Joe Kirchner, senior economist for realtor.com.

Boston, a city millennials love continues to have inventory and affordability issues. According to Zillow, the median price for homes currently listed in Boston is $735,000.

“I pay attention to numbers and we don’t have enough good property on the market. There is big demand in Boston with companies moving to here either from outside of the city or from other states,” observes David Bates, broker associate at William Ravis Real Estate

“I would be surprised to see a slowdown. I see increasing demand and very good appreciation,” adds Bates who is also known for writing about the Greater Boston real estate market for Banker and Tradesman, Boston Magazine, The Boston Globe, Boston Herald and Boston.Curbed.com.

Clearly, getting your foot in the proverbial front door of your first house remains the key to achieving the American dream.