Category: Mortgage (Page 27 of 60)

UPDATE: New Home Sales and New Appreciation Numbers

April 27, 2021 / Tom Bonetto

New home sales, which measures signed contracts on new homes, were up 21% in March, and the February number was revised higher, as well.

Taking out the revision, sales would be up 32% from last month’s original number.

Sales are up 67% on a year over year basis, although that is a little bit skewed, due to the economy being shut down this time last year.

Looking at inventory levels – there were only 307,000 new homes for sale in March, down 7% from last year. There are 14% fewer homes for sale under $300,000 compared to last year. The Median home price was reported at $331,000 up not even 1% from last year.

Appreciation

Home prices continue to increase across the country, as the latest S&P CoreLogic Case-Shiller Home Price Index report showed a 12% annual gain in February — up from 11.2% in January.

Case-Shiller Home Price Indices are the leading measures of U.S. residential real estate prices, tracking changes in the value of residential real estate nationally.

Clipart of White House Acting a Money Drawer

It’s the ninth straight month of increasing prices. The 12% home price gain is the highest recorded increase in the last 15 years!

Phoenix, San Diego, and Seattle reported the highest year-over-year home price gains among the 20 cities in February, with Phoenix leading the way with a 17.4% increase from 2020. San Diego showed a 17% increase, and Seattle showed a 15.4% increase.

“Some recent signs suggest that the historically tight inventory pressures may finally be starting to ease,” said Zillow Economist Matthew Speakman.

“Should those signs materialize, the meteoric rise in home prices may finally have a reason to come back down to earth. For now, red hot home price appreciation shows few signs of cooling.”

Home Appreciation 2020-2021: Onward and Upward!

April 14, 2021 / Tom Bonetto

If you were a homeowner in 2020, you were a big winner, thanks to fantastic home price appreciation.

Real estate analytics firm CoreLogic reported that the U.S. Home Price Index rose 9.2% in December from a year earlier, largest annual gain in more than six years.

Hand Following Lines on Electronic Graph

This was primarily due to low inventory and attractive low-interest rates.

Per CoreLogic’s press release:

“The housing market exceeded expectations in 2020, closing out the year with the highest annual home price gain since February 2014 in December at 9.2%. Despite a blip in April, home-purchase demand surged as record-low mortgage rates persuaded first-time homebuyers to enter the market. Meanwhile, the consequences of the pandemic were seen in the dwindling supply of homes — dropping, on average, 24% below 2019 levels — as homeowners delayed selling.”

Key Findings from 2020

Nationally, home prices increased 9.2% in December 2020, compared with December 2019. On a month-over-month basis, home prices increased by 1% compared to November 2020.
December 2020 gains across all of the 10 select metropolitan areas (see table 1 below) surpassed their December 2019 levels.
Affordability concerns continue to persist as prices continue to steeply rise. For instance, in San Diego, prices increased 10.4% year over year in December 2020 compared to the 3% gain December 2019. San Diego home prices are also forecasted to increase an additional 8.2% over the next 12 months.
At the state level, Idaho, Indiana and Maine had the strongest price growth in December, up 19.1%, 16.1% and 15.2%, respectively.

Modern Apartment with Big Windows and Black Metal Stairs

“Two record lows are fueling home price gains: for-sale inventory and mortgage rates,” said Dr. Frank Nothaft, chief economist at CoreLogic. “Prospective sellers with flexible timetables have opted to delay listing their home until the pandemic fades or they are vaccinated. We can expect more inventory to come available in the second half of the year, leading to slowing in price growth toward year-end.”

Chart of Single Family Combined HPI Percent Change and Market Condition Indicators fo Select Metros

Home Ownership

More good news…the percentage of Americans who own a home—67.4% in the third quarter of 2020—was the highest in 12 years. In the third quarter of 2019, the rate was 64.8%.

You can find out more regarding the 2021 forecast here…

Second Homes and Investment Properties – New Regulations and Rates

March 22, 2021 / Tom Bonetto

Fannie Mae and Freddie Mac are tightening the underwriting criteria for second homes and investment properties. They will also begin to limit the number of these mortgages that they will acquire.

“Recent amendments to our senior preferred stock purchase agreement with Treasury impose additional risk criteria on the loans we acquire,” the Government Sponsored Enterprise said in a letter. “One of those restrictions is a 7% limit on our acquisition of single-family mortgage loans secured by second home and investment properties.”

This means that non-owner occupied transactions (2nd homes and investment properties) will become a bit more difficult in terms of qualification and slightly more expensive, in terms of interest rates.

Lenders are now being forced to add to the cost of the loan and raise interest rates – anywhere from 50 basis points to as high as 250 bps. That can mean an increase in rate of 1/8% to 1.25%, depending on the investor.

Finance of America, my employer, has added 50 basis points for all 2^nd home and investment property purchases and refinances. This is on the low side, relative to many in the industry, as others that I’ve spoken to have added as much as 250 bps.

From Investopedia: “Basis points, otherwise known as bps, are a unit of measure used in finance to describe the percentage change in the value of financial instruments or the rate change in an index or other benchmark. One basis point is equivalent to 0.01% (1/100th of a percent) or 0.0001 in decimal form.”

Don’t hesitate to contact me for more information to see how this might impact your upcoming purchase.

March 2021 Mortgage Rate and Market Update

March 15, 2021 / Tom Bonetto

typewriter — Photo by Markus Winkler on Pexels.com

As inflation rises, it typically causes mortgage rates to move higher as well. That’s because inflation is the arch enemy of interest rates, since it erodes the buying power of the fixed return that a mortgage holder receives.

While inflation may look tame to everyone at this time, that looks like it will change when you dig a little deeper.

Inflation Fears

But in the coming months, the inflation levels are expected to rise significantly, as the readings for the more current months replace the extremely low numbers from 2020.

A look at the closely watched “Consumer Price Index Core Rate” of inflation, which strips out the volatile food and energy sectors, shows a current reading of just 1.3% inflation for the past 12 months. This has helped interest rates remain low.

It’s quite possible to see the rate of inflation rise towards 2.5%. It’s likely that this will influence interest rates to higher levels.

For borrowers, the good news is that inflation is likely to become more tame later this year. So now may be a great time for you to take advantage of the low-rate environment before these inflation readings start to move higher.

Secondly, our central banks have artificially depressed sovereign bond yields for years. Now, a small rise in yields can cause a move higher in interest rates, as well.

2nd Home and Investment Properties

Finally, Fannie Mae is tightening the underwriting criteria for second homes and investment properties, the government sponsored entity said Wednesday.

“Recent amendments to our senior preferred stock purchase agreement with Treasury impose additional risk criteria on the loans we acquire,” the GSE said in a letter. “One of those restrictions is a 7% limit on our acquisition of single-family mortgage loans secured by second home and investment properties.”

This means that non-owner occupied transactions (2^nd homes and investment properties) will become a bit more difficult in terms of qualification and slightly more expensive, in terms of interest rates.

Use That Equity

One other thing to consider for current homeowners – a cash-out refinance to utilize the equity in your home to eliminate all other consumer debt. Many of my clients have saved anywhere from $500 to $1,750 per month in their overall payments. Find out more on that here…and do reach out to me for more on this subject!

Barry Habib – MBS Highway 2021 Webinar On Demand

February 15, 2021 / Tom Bonetto

On February 4th of this year, industry expert Barry Habib joined Finance of America Mortgage for a presentation on the current real estate marketplace and his opinions on interest rates moving forward into this year and beyond.

It was a fantastic event and if you weren’t able to join us or would like to review it again, I have a link to the recorded version below.

By way of introduction, Barry Habib is a real estate and mortgage industry executive, bestselling author, and founder and CEO of MBS Highway. Barry is also a well known media resource and TV commentator on the mortgage and real estate markets.

Here’s the link:

Barry discussed his predictions for the housing market going forward in 2021 and the benefits of utilizing some key tools to show clients and referral partners the power of home ownership.

Also, regarding the AVM reports and “Bid Over Ask” tools that were talked about during the program – I can easily do them for any property or client you have.

Finally, here are a few links that might help, too:

The Lending Coach 2021 Forecast: https://lendingcoach.net/forecast-2021-real-estate-mortgage-rates/

Bid Over Ask Tool: https://lendingcoach.net/offering-over-asking-price/

I highly recommend that you take a look, as Barry has some fantastic insights into our market!

Category: Mortgage (Page 27 of 60)

UPDATE: New Home Sales and New Appreciation Numbers

Appreciation

Home Appreciation 2020-2021: Onward and Upward!

Key Findings from 2020

Home Ownership

Second Homes and Investment Properties – New Regulations and Rates

March 2021 Mortgage Rate and Market Update

Inflation Fears

2nd Home and Investment Properties

Use That Equity

Barry Habib – MBS Highway 2021 Webinar On Demand

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