What Federal Rate Hike? 12/28/15

In Market Statistics by Juli

Mortgage Rates Dip Lower, Despite Federal Rate Hike.

 

One week after the Federal Reserve raised short-term interest rates slightly from record lows, the average on a 30-year fixed mortgage went the other way: It dipped to 3.96 percent from 3.97 percent last week, mortgage giant Freddie Mac said Thursday.

The drop is a reminder that the Fed has only an indirect effect on long-term mortgage rates, which more closely track the yield on the 10-year U.S. Treasury. And that yield, in turn, tends to stay down as long as inflation remains low and investors keep buying Treasurys. The 10-year Treasury yield has declined slightly since the Fed’s hike last week.

“The Fed raising short-term rates by itself doesn’t have a very profound effect on mortgage rates,” said Sean Becketti, Freddie Mac’s chief economist.

Back in the mid-2000s, when the Fed raised rates at 17 straight meetings, mortgage rates barely budged, Becketti noted.

Still, the average 30-year mortgage rate is up slightly from 3.83 a year ago and from 3.76 percent in late October. Becketti said a few additional modest Fed rate hikes won’t likely have much effect on longer-term rates until the central bank starts reducing the huge portfolio of bonds it accumulated during and after the Great Recession.

The Fed’s bond purchases were intended to lower longer-term loan rates to try to stimulate borrowing and spending and energize the economy. The Fed ended its bond purchases last year as the U.S. economy strengthened. But it has yet to begin selling the bonds, which would tend to nudge up longer-term rates.

Fed Chair Janet Yellen has signaled that the Fed is in no hurry to start reducing its portfolio of bonds — one reason long-term mortgage rates could remain low for a while.

What’s more, inflation remains unusually low — well below the Fed’s 2 percent target level. In addition, economic weakness and financial volatility overseas are drawing many global investors to the safety and relatively higher returns of U.S. Treasurys. This is putting further downward pressure on longer-term U.S. yields and keeping long-term mortgage rates low.

John Canally, chief economic strategist at LPL Financial, says mortgage rates “should not be a major impediment to the housing market” even if they do rise a bit in 2016. He notes that 30-year fixed-rate mortgages averaged 6.5 percent during the housing boom of 2000 to 2007.

Historically low mortgage rates have helped the American housing market recover from the real estate bust of the late 2000s. Despite a recent decline, sales of existing homes are likely to rise 5 percent this year from 2014. Year to date, new-home sales have advanced 14.5 percent, driven by job growth that has pushed the unemployment rate to a seven-year low of 5 percent.

On Thursday, Freddie Mac also reported that the rate on 15-year fixed-rate mortgages, which are popular with homeowners who are refinancing their home loans, was unchanged at 3.22 percent.

To calculate average mortgage rates, Freddie Mac surveys lenders across the country at the beginning of each week. The average doesn’t include extra fees, known as points, which most borrowers must pay to receive the lowest rates.

One point equals 1 percent of the loan amount. The average fee for a 30-year mortgage was unchanged from last week at 0.6 point.

The average rate on five-year adjustable-rate mortgages rose to 3.06 percent, highest since September 2014 and up from 3.03 percent last week; the fee remained at 0.4 point. The average rate on one-year ARMs increased to 2.68 percent, highest since September 2013 and up from 2.67 percent last week; the fee held at 0.2 point.

This Week in Real Estate 12/27/15

In Market Statistics by Juli

Freddie Mac’s Five Housing Predictions for 2016. With just a few days left in 2015, Freddie Mac is looking towards 2016 and trying to predict just what’s going to happen in housing over the next 12 months. Freddie Mac’s chief economist, Sean Becketti, said that interest rates should remain at “historically low levels” throughout 2016, in spite of whatever moves the Federal Reserve is expected to make. Here are five more housing predictions for 2016, courtesy of Freddie Mac: (1) Expect the 30-year fixed-mortgage to average below 4.5% for 2016 on an annualized basis, (2) Gradually higher mortgage interest rates will present an affordability challenge, but expect a strengthening labor market and pent-up demand to carry 2015’s home sales momentum into 2016, (3) Expect house price growth to moderate a bit to 4.4% in 2016, (4) Expect total housing starts to increase 16% year-over-year and total home sales to increase 3% and (5) While home purchases will increase next year, higher interest rates will reduce the refinance volume pushing overall mortgage originations lower in 2016 than in 2015. Full Story… http://www.housingwire.com/articles/35894-here-are-freddie-macs-five-housing-predictions-for-2016

 

Record-Setting Solar Market Shines Light on New Design Trends. 2015 could very well be a record-setting year for the solar market. The third quarter set another record for growth of residential solar installations, increasing 69% year-over-year and accounting for 41% of the U.S. solar market. Coupled with the likely extension of several energy efficient tax credits, the solar market is poised for an even bigger boom over the next five years. As the United States increasingly embraces solar energy, design trends in home building will continue to evolve. This evolution is changing perspectives of builders, architects and home owners alike, many of whom previously considered solar panels to be eyesores, more than anything. “The key is to integrate them as early as possible into the overall design process,” said James Hannah, director of client energy services at Bright Power. Full Story… http://nahbnow.com/2015/12/record-setting-solar-market-shines-light-on-new-design-trends/?utm_source=newsletter&utm_medium=email&utm_campaign=mmb1221

 

U.S. Jobless Claims Near 42-Year Low as Labor Market Tightens. The number of Americans filing for unemployment benefits fell more than expected last week, nearing a 42-year low as labor market conditions continued to tighten in a boost to the economy. Initial claims for state unemployment benefits dropped 5,000 to a seasonally adjusted 267,000 for the week ended December 19, not far from levels last seen in late 1973, the Labor Department said on Thursday. Claims have been below 300,000, a threshold associated with a buoyant labor market, for 42 consecutive weeks. That is the longest stretch since the early 1970s. Full story… http://www.reuters.com/article/us-usa-economy-idUSKBN0U711A20151224?feedType=RSS&feedName=top

This Week in Real Estate 12/20/15

In Market Statistics by Juli

Finally, speculation ends after more than 9 years (June 2006) of no rate increase the Federal Reserve increased rates 0.25 percent This Week in Real Estate. The impact of the Feds action: still historically low rates. Below are a few of the highlights from the third week in December that influence our business:

 

CoreLogic’s Equity Report Has Good News For Homeowners. The Equity Report provides a quarterly overview of the distribution of equity across all U.S. single-family residential properties with a mortgage. Nationwide, borrower equity increased year-over-year by $741 billion. During Q3, 256,000 residential properties regained equity, putting the number of mortgaged residential properties with equity at 46.3 million. That’s 92 percent of total mortgaged properties, CoreLogic said. The number of underwater home decreased year-over-year by 1.1 million, or 20.7 percent. 37.5 million borrowers have at least 20% equity in their home. Metro areas with the highest percentages of equity homes are: Seattle, Dallas, Denver, Portland, Oregon, Houston. The percentage of homes with positive equity in Washington is 96.5% and 96.4% in Oregon. Full Story… https://www.inman.com/2015/12/16/corelogics-equity-report-has-good-news-for-homeowners/

 

Washington Ends Year With Extended Tax Benefits For Homeowners. A significant piece of tax legislation is now on its way to the President’s desk, and the bill includes the extension of a number of expired tax provisions important to supporting homeowners and real estate investment including mortgage debt forgiveness and mortgage insurance premium deductions. Under the 2007 “Mortgage Forgiveness Debt Relief Act,” Congress changed the rules and said unpaid mortgage debt would not be regarded as taxable income, but only for five years. The rule has been continued through a series of extensions and now mortgage borrowers will be protected through 2016. The ability to write off mortgage insurance premiums has been in the tax code for several years but it’s a rule which is only extended annually. Under this regulation borrowers can deduct the cost of mortgage insurance premiums in the same way that they deduct mortgage interest. The mortgage insurance deduction was scheduled to end on December 31st but now Congress has decided it should continue until the end of 2016, at which point we can go through the extension process once again. Full Story… http://www.realtytrac.com/news/company-news/washington-ends-year-with-extended-tax-benefits-for-homeowners/

 

Single-Family Starts Reach Seven-Year High in November. Nationwide housing starts rose 10.5% to a seasonally adjusted annual rate of 1.173 million units in November.  Single-family starts were up 7.6% to 768,000, their highest level since January 2008. Every region except the Midwest experienced a rise in single-family starts. Permits also peaked at their highest level since August 2007 at 1.289 million which was up 11% from an upwardly revised October. Single-family permits were up modestly but enough to also set an eight year record of 723,000. Regionally, the Midwest, South and West posted respective permit gains of 22%, 5.6% and 21.7%. Permit levels in the Northeast held steady.  Full Story… http://www.nahb.org/en/news-and-publications/Press-Releases/2015/december/single-family-starts-reach-seven-year-high-in-november.aspx

Portland Market Update 12/17/15

In Market Statistics by Juli

Despite some usual seasonal cooling, the Portland-area housing market continued surging to November sales numbers not seen since before the 2008 financial crisis.

 

The 2,504 pending sales in the region were the most for a November since 2005 and reflected a 19.8 percent increase over November 2014, according to a monthly report from the Regional Multiple Listing Service. And the 2,153 closed sales were the most for a November since 2006. Both figures fell – by 16.4 percent for pending sales and 20.8 percent for closed sales – from the levels seen in October.

 

Inventory slightly increased, from 1.8 months to 2 months. The figure estimates the amount of time it would take for all current homes on the market to sell at the current pace.

 

“Although improving modestly, the Portland housing market remains remarkably tight with only two months of inventory currently available to sellers,” said Matthew Gardner, chief economist. “That’s still well below the 4 to 6 months we would normally see in a more balanced market.”

 

The average sale price in November was $353,400, a 6.1 percent year-over-year increase. The median sale price of $306,000 reflected a 7.4 percent annual increase.

 

“Both the average and median sales prices are above historic highs – unsurprising given the extremely tight market,” Gardner said. “I anticipate that we will continue to see demand outstrip supply over the winter months.”

This Week in Real Estate 12/13/15

In Market Statistics by Juli

Solid growth in consumer spending in November coupled with a good jobs report and an uptick in the consumer sentiment index all but ensures the Federal Reserve will increase rates This Week in Real Estate. Below are a few of the highlights from the second week in December that influence our business:   * Homeowners Reap Remodeling Benefits Whether Selling or Staying. The 2015 Remodeling Impact Report, the first of its kind from NAR that examines personal satisfaction from remodeling projects, surveyed Realtors, consumers who have completed remodeling projects, and members of the National Association of the Remodeling Industry. “Remodeling projects can greatly improve both the value of and satisfaction with one’s home, which are great things no matter the reason for the project,” says Judy Mozen, president of the National Association of the Remodeling Industry. “This report highlights the best projects to consider in either situation and showcases just how much of a difference a good and professional remodel can make in real numbers.” NAR President Tom Salomone says it’s important that the report not only assist homeowners who are preparing to sell in choosing the best projects to attract buyers, but also helps those looking to get more personal satisfaction out of their homes. Report Attached. Full Story… http://www.realtor.org/reports/remodeling-impact

 
Consumer Spending Reaffirms Likelihood of December Interest Rate Hike. Consumer spending reported solid growth in November, giving another positive sign to the industry that the Federal Reserve will likely raise interest rates next week for the first time in nearly a decade. The outlook for consumer spending, which accounts for more than two-thirds of economic activity, got a lift from other data on Friday showing consumer sentiment nudged up in early December. The University of Michigan’s consumer sentiment index rose to 91.8 early this month from a reading of 91.3 in November. Consumers’ attitudes toward purchases of major household items were the strongest since 2005. Full Story… http://www.housingwire.com/articles/35815-consumer-spending-reaffirms-likelihood-of-december-interest-rate-hike?eid=322520585&bid=1255140

 
U.S. Foreclosure Starts at Lowest Level in More Than 10 Years. RealtyTrac released its U.S. Foreclosure Market Report for November 2015 this week, which shows foreclosure filings were reported on 104,111 U.S. properties in November, a decrease of nearly 10 percent from the previous month and down more than 7 percent from a year ago. The 10 percent monthly decrease in overall foreclosure activity was caused largely by a 15 percent monthly drop in foreclosure starts, with 41,208 properties starting the foreclosure process for the first time in November, the lowest monthly total since May 2005. Foreclosure starts have decreased on a monthly basis for seven of the last eight months and November was the fifth consecutive month where national foreclosure starts decreased on a year-over-year basis.   Full Story… http://www.realtytrac.com/news/foreclosure-trends/november-2015-foreclosure-market-report/

 
Appraised Values Remain Slightly Lower Than Homeowner Expectations. The average appraisal in November was 1.87 percent lower than the value the homeowner expected, according to Quicken Loans’ national Home Price Perception Index (HPPI). The difference between the values was slightly higher in October, making November the third consecutive month the gap between values has narrowed. Overall, November marks the 10th straight month homeowners’ expectations of their home’s value exceeded the appraisers’ valuation. Appraised values rose an average of 1.08 percent since October, and have increased 4.84 percent year-over-year. “The variation in HPPI values across the country is a reminder of how localized real estate truly is,” says Bob Walters, Quicken Loans Chief Economist. “While home values continue to make leaps forward on the west coast, it takes time for the homeowner to recognize those gains. In the same vein, home value increases are moderating in much of the country, causing homeowners to be overly optimistic about their property’s value.” Full Story… http://www.quickenloans.com/press-room/2015/12/08/appraised-values-remain-lower/

Portland is Among the Top 5 U.S. Housing Markets 12/11/15

In Market Statistics, Portland Real Estate News by Juli

A mix of solid economic fundamentals and strong housing components have landed Portland among the top five housing markets in the entire country. That’s according to a new report from online real estate marketplace Auction.com, Portland has the fifth best market in the nation for single-family homes.

Westover-Portland-Oregon

The report, called the “Top Single Family Housing Markets Report for Fall 2015,” ranked Portland fifth, behind only Fort Lauderdale, Orlando, Palm Beach County and, at the top of the list, Seattle. According to the report, the top five markets had the best mix of rising home prices, “favorable” affordability and strong housing demand. They all also had churning economies and positive demographic trends on their side. The company attributed Portland’s strong showing to a tech sector boost that’s helped push employment and payrolls 4 percent and 6.5 percent above their all-time highs, respectively.

In addition, the report cited pickups in Portland’s professional service and information and noted that the city’s population grew 1.5 percent last year alone. Home prices have risen every quarter for the past three years and prices have climbed nearly 10 percent in the past year. According to the latest RMLS numbers, the average sale price in September was up nearly 6 percent over last year to $352,000.

Auction.com based Seattle’s top ranking on similar factors: a booming tech sector, rising home prices and home sales that have climbed nearly 13 percent in the past year. In making its listing, the report took into account pricing, sales, permit activity and economic growth, along with population changes.

This Week in Real Estate 12/6/15

In Uncategorized by Juli

Due to a healthy November employment report, This Week in Real Estate once again fueled speculation that the Fed will raise interest rates before years end. Below are a few of the highlights from the first week in December that influence our business:

 

* 35 Percent of U.S. Markets at New All-Time Home Price Peaks. RealtyTrac released its October 2015 U.S. Home Sales Report, which shows that among 94 major metro areas analyzed for the report, 33 markets (35%) have now reached new all-time home price peaks in 2015. “More than one-third of the nation’s major housing markets have now reached new home price peaks this year. Home sellers are sitting pretty in this market, realizing an average profit-since-purchase of 16 percent – the highest in any month since December 2007,” said Daren Blomquist, vice president at RealtyTrac. Metro areas that have reached new home price peaks in 2015 include Detroit, Dallas, Houston, Atlanta, St. Louis, Denver, Pittsburgh, Charlotte, Portland, San Antonio and Columbus, Ohio. There were a total of 2,815,704 single family homes and condos sold in the first 10 months of 2015. That was a nine-year high for the first 10 months of the year and a 6 percent jump from the same time period in 2014.

Full Story… http://www.realtytrac.com/news/realtytrac-reports/october-2015-home-sales-report/

 

* Does November Jobs Report Signal December Interest Rate Hike? With the addition of 211,000 jobs in November, the economy continues to recover at a steady clip. It was the 69th consecutive month of private sector job growth, to the tune of 13.7 million jobs created – the longest streak on record. For the first time since 1999, we are on track to have back-to-back years of average monthly job growth over 200,000 jobs. The unemployment rate held steady at 5.0 percent. Job growth in November was not just solid but also widespread, including very strong growth in construction.

Full Story… http://www.housingwire.com/articles/35763-november-jobs-report-signals-december-rate-hike-likely

 

* U.S Construction Spending Rises Solidly to Near Eight-Year High. U.S. construction spending rose more than expected in October as outlays rose across the board. Construction spending increased 1.0 percent to a seasonally adjusted $1.11 trillion rate, the highest level since December 2007, the Commerce Department said on Tuesday. Construction outlays were up 13 percent compared to October of last year. Construction spending has risen every month this year.

Full Story… http://www.reuters.com/article/us-construction-spending-idUSKBN0TK4ZP20151201?feedType=RSS&feedName=businessNews#kSZlaGI0OzKR1Mdt.97

 

Pending Sales Hold. After two consecutive monthly declines, the Pending Home Sales Index increased modestly in October from an upwardly revised September reading, and has increased year-over-year for 14 consecutive months. The Pending Home Sales Index (PHSI), a forward-looking indicator based on signed contracts reported by the National Association of Realtors, increased 0.2% in October to 107.7 and is 3.9% above the same month a year ago. The PHSI increased in the Northeast and West by 4.5% and 1.7%, but declined in the South and Midwest by 1.7% and 1.0% respectively. Year-over-year, the West, Northeast and Midwest were up 10.4%, 6.8% and 3.3% respectively.

Full Story… http://eyeonhousing.org/2015/11/pending-sales-hold/

Portland, OR Real Estate Market News 12/4/15

In Portland Real Estate News by Juli

6aceb2dddc207b09f00ed40a25cf5d9eLast month, the Portland Business Journal did an analysis of the RMLS data and came up with the 25 hottest neighborhoods in Portland — by the number of days on the market and the total number of sales per zip code. All numbers are for the third quarter of 2015, aka the summer peak-sales months of July, August and September. To make it more interesting, here are some highlighted numbers and some fun facts about Oregon:

Between July and September, a total of nearly 10,000 homes were sold. If the entire population of Astoria, Oregon bought a home in Portland, that’s how many they’d buy!

More homes sold in the suburbs than in the heart of the city – which makes sense because that’s where most of homes are in the Portland area. The “hottest neighborhood” in this category was Forest Heights/Bethany, with 372 homes sold. Beaverton/Aloha, Foster/Powell, and Oregon City/Happy Valley also ranked high, each selling more than 300 homes this summer.

The average home in Portland sold in 44 days. That’s a 15% increase from the previous quarter. That’s also the gestation period of the gray squirrel, many of which can be seen scurrying through the neighborhoods of Portland.

The “hottest neighborhood” by this measure was Ladd’s Addition/Hawthorne, where homes sold in a brief 17 days! Also hot were North Tabor, Milwaukie, Piedmont/Concordia and Beaverton/Aloha, all selling homes in less than 20 days. That’s about how long it took the Lewis and Clark expedition to reach the Pacific Ocean, after scouting it out from their camp at what is now Portland.

This quarter, the greater Portland region saw 9,772 home sales, up from 7,933 sales for the summer of last year (2014). That means sales grew 23% year-over-year. If the city of Portland were to grow that much, we would encompass the city of Vancouver, Washington, too!

There are a total of 101 zip codes in the Portland metro region. The 25 top neighborhoods (grouped by zip code for this report) accounted for more than half of the sales this quarter.

Looking for more information on the Portland housing market? Your Portland listing agent and buyers’ team are standing by.

Owner-Occupied Rental Trends in Portland, OR 12/3/15

In Portland Real Estate News by Juli

Rental

Virtually all of the 47,500+ housing units added since the recession in the Portland area are rentals rather than owner-occupied homes, according to new numbers released by the U.S. Census Bureau.T he trend is consistent across Multnomah, Washington, Clackamas and Clark counties. The number of apartments or rental homes has surged over the last five years, though the number of new homeowners has barely budged. The result is a decline in the regional homeownership rate overall, from 63 percent to 60.

 

The data, made public Wednesday, reflects the latest statistics from the American Community Survey and allows for the first-ever snapshot comparing the five-year periods between 2005 to 2009 and 2010 to 2014. Predictably, Multnomah County had the highest number of new rental units. There was an average of 125,330 renter-occupied units in the county each year between 2005 and 2009, the survey found. And there were nearly 143,000 rentals each year between 2010 and 2014 – an increase of 14 percent. Rental units in Washington and Clackamas counties increased at similar rates.

 

Meanwhile, the increase in owner-occupied units in Multnomah County between the two time periods totaled fewer than 900, or less than 1 percent. Interestingly, a separate set of census data shows that in Washington, Clackamas and Clark counties, the number of owner-occupied units built since 2010 still exceeded the number of newly constructed rental units. And in Multnomah County, the number of newly built rentals only exceeded new owner-occupied homes by 380 units.

 

It is, however, expected that interest in owner-occupied housing will return – if it ever went away.

This Week in Real Estate 11/29/15

In Market Statistics by Juli

Breaking news This Week in Real Estate: Google is now in the mortgage business. Below are a few of the highlights from the final week in November that influence our business:

 

* New Home Sales Beat ExpectationsSales of new single-family houses in October 2015 beat expectations and came in at a seasonally adjusted annual rate of 495,000, according to estimates released jointly Wednesday by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 10.7% above the revised September rate of 447,000 and is 4.9% above the October 2014 estimate of 472,000. The median sales price of new houses sold in October 2015 was $281,500, while the average sales price was $366,000. The seasonally adjusted estimate of new houses for sale at the end of October was 226,000. This represents a supply of 5.5 months at the current sales rate. Full Story… http://www.housingwire.com/articles/35694-new-home-sales-beat-expectations

 

* Home Prices Continue Defying Gravity and Expectations. Price increases did not slow in the third quarter as expected the Federal Housing Finance Agency (FHFA) said today. The agencies purchase-only seasonally adjusted House Price Index (HPI) for the quarter shows that prices rose for the 17th consecutive quarter and posted the largest month-over-month gain since at least that in March to April. The quarterly measure was 5.7 percent higher than in the third quarter of 2014. Year-over-year the increase for the entire U.S. was 6.1 percent. The 8 percent monthly gain crushed analysts expectations.”The long-anticipated slowdown in home price appreciation did not occur in the third quarter,” said FHFA Principal Economist Andrew Leventis. “The factors that have contributed to extraordinary price growth over the last few years-low interest rates, tight inventories, strong buyer confidence, and improving income growth-continued to drive prices upward in much of the country. However, as prices continue to rise, reduced affordability will be a stronger market headwind,” Leventis said. Full Story… http://www.mortgagenewsdaily.com/11252015_fhfa_hpi.asp

 

* Google Launches Mortgage Comparison Tool. Well, it’s official. Google has come to mortgages. Google is launching its own mortgage comparison tool via its Compare service. Google Compare is no stranger to mortgages, just not in this country. Google Compare in the United Kingdon previously offered car insurance, travel insurance, credit cards and mortgages. Google began laying the groundwork in February, when it launched its own built-in mortgage calculator. Beginning very soon, consumers all over the country will be able to shop for a mortgage on Google. Imagine a consumer searching for “mortgage” on Google and being prompted to review a list of Google-approved lenders and their rates. “Google Compare for mortgages provides a seamless, intuitive experience that connects lenders with borrowers online,” Google posted on its website Monday. Full Story… http://www.housingwire.com/articles/35677-google-launches-mortgage-comparison-tool