Weekly Market Activity Report
The recent plunge downward in mortgage rates to a decades-low level is spurring Twin Cities home sales, despite shorter days and holiday interruptions. For the week ending December 20, there were 553 purchase agreements signed (pending sales), which is an increase of 20.0 percent from the same week last year.
Since rates dropped three weeks ago, there have been 368 more pending sales than there were during the same period in 2007, an increase of 27.5 percent. During this period, 57.6 percent of sales have been lender-mediated foreclosures and short sales and 45.8 percent are below $150,000.
Listing supply is relatively flat with last year at this time over the past few weeks, with an increasing share of new listings being lender-mediated. Traditionally, sellers often pull back at this time of year to wait out the holidays, but banks continue to list no matter what time of year it is.
Tuesday, December 30, 2008
Thursday, December 18, 2008
Mortgage Applications Back on the Rise
Mortgage Applications Back on the Rise
Mortgage applications climbed last week in response to falling interest rates, according to the Mortgage Bankers Association weekly mortgage applications survey.
The index increased 2.9 percent to 841.4 from 817.7 the previous week on an adjusted basis. On an unadjusted basis, it also increased 2.9 percent and was up 37.3 percent compared with the same week a year ago.Most of the activity was in refinances, which increased to 76.9 percent of the total. "It doesn't solve the problem for people who owe more than their home is worth, but for the significant majority who are able to refinance, it is quite a boon," said Bob Walters, chief economist at Quicken Loans in Livonia, Mich.Interest rates were down last week compared with the previous week, and are expected to decline still further in response to the Federal Reserve cutting its benchmark rate to a record low this week.Last week’s already low rates continued to decline:
30-year fixed-rate mortgages decreased to 5.18 percent from 5.44 percent;
15-year fixed-rate mortgages decreased to 4.93 percent from 5.08 percent
1-year ARMs decreased to 6.63 percent from 6.76 percent.Source: Mortgage Bankers Association and Reuters News, Lynn Adler (12/17/2008
Mortgage applications climbed last week in response to falling interest rates, according to the Mortgage Bankers Association weekly mortgage applications survey.
The index increased 2.9 percent to 841.4 from 817.7 the previous week on an adjusted basis. On an unadjusted basis, it also increased 2.9 percent and was up 37.3 percent compared with the same week a year ago.Most of the activity was in refinances, which increased to 76.9 percent of the total. "It doesn't solve the problem for people who owe more than their home is worth, but for the significant majority who are able to refinance, it is quite a boon," said Bob Walters, chief economist at Quicken Loans in Livonia, Mich.Interest rates were down last week compared with the previous week, and are expected to decline still further in response to the Federal Reserve cutting its benchmark rate to a record low this week.Last week’s already low rates continued to decline:
30-year fixed-rate mortgages decreased to 5.18 percent from 5.44 percent;
15-year fixed-rate mortgages decreased to 4.93 percent from 5.08 percent
1-year ARMs decreased to 6.63 percent from 6.76 percent.Source: Mortgage Bankers Association and Reuters News, Lynn Adler (12/17/2008
Tuesday, December 16, 2008
Where Will Housing Prices Go Next?
Where Will Housing Prices Go Next? How long will it take for home values to zoom back up. Some prognosticators predict decades. Others say there is a brighter picture."We will never see these prices again in our lifetime, when you adjust for inflation," says Peter Schiff, president of investment firm Euro Pacific Capital of Darien, Conn. "These were lifetime peaks."But Wachovia economist Adam York expects home values to recover fairly quickly, beginning in 2010. "The one saving grace is the population is growing by 3 million people a year," he says. "They need to live somewhere. That means more roofs."You be the judge, Here are some historic measures:Rent. In the last half century, homes have on average sold for 20 times what it costs to rent them for a year. In 2006, at least in some places, they were selling for 32 times annual rent.Income. From 1950 to 2000, home values sold for three times average household income. In 2006, average household income was $66,500, which should have put median home prices at $200,000. Instead the median was $301,000.Appreciation. Existing home values rose 0.5 percent annually, adjusted for inflation, from 1950 to 2000. From 2000 to 2006, they rose at the annualized rate of 8.2 percent above inflation and peaked with a 12.3 percent rise in 2005.Source: USA Today, Dennis Cauchon (12/12/2008)
Fed Expected to Cut Key Interest Rate Tuesday
Fed Expected to Cut Key Interest Rate Tuesday
The Federal Reserve begins a two-day meeting today where it is expected to cut it's key interest rate, perhaps to an all-time low. The Fed will likely announce Tuesday that it is cutting its key rate in half to just 0.50 percent. However, a few economists predict the Fed will go even further and cut the rate to one-quarter of a percentage point.
If that happens, it will be the lowest rate on record going back to 1954, when records tracking the monthly rates were first kept.However deeply the Fed decides to cut rates, the prime rate for many consumer and small-business loans would drop by a corresponding amount. The prime lending rate, currently at 4 percent, is used to determine rates on home equity loans, certain credit cards, and certain consumer loans, the Associated Press reports. "It is not so much going to give the economy a big push forward. It's more a case of trying to help the economy from being pushed further backward by all these negative events," said Stuart Hoffman, chief economist at PNC Financial Services Group.
Source: The Associated Press (12/14/12008)
Weekly Market Activity Report
Weekly Market Activity Report
As fall turns into winter—and winter turns dark and cold—activity in the Twin Cities housing market has entered its annual hibernation. On a weekly basis, new listings, total inventory and sales are all declining as consumers batten down the hatches and prepare for the holidays. Relative to this time last year, however, activity is stronger. For the week ending December 6, there were 597 signed purchase agreements (pending sales), which is up 27.6 percent over the same week last year. Roughly half of these sales—54.7 percent—were lender-mediated foreclosures or short sales.
On the supply side, new listings were relatively flat, up only 0.7 percent for the same time period comparison. The total supply of homes for sale currently sits at 27,035, down 8.2 percent compared to this time last year. Expect the decline in overall supply to continue into January. At the same time, expect the lender-mediated market share of that supply to increase.
As fall turns into winter—and winter turns dark and cold—activity in the Twin Cities housing market has entered its annual hibernation. On a weekly basis, new listings, total inventory and sales are all declining as consumers batten down the hatches and prepare for the holidays. Relative to this time last year, however, activity is stronger. For the week ending December 6, there were 597 signed purchase agreements (pending sales), which is up 27.6 percent over the same week last year. Roughly half of these sales—54.7 percent—were lender-mediated foreclosures or short sales.
On the supply side, new listings were relatively flat, up only 0.7 percent for the same time period comparison. The total supply of homes for sale currently sits at 27,035, down 8.2 percent compared to this time last year. Expect the decline in overall supply to continue into January. At the same time, expect the lender-mediated market share of that supply to increase.
Wednesday, December 10, 2008
'Extreme Makeover' Winners Face Foreclosure
'Extreme Makeover' Winners Face Foreclosure
One of the most-watched winners on ABC-TV’s "Extreme Makeover: Home Edition" is about to undergo foreclosure.The Nov. 6, 2004, show, which set an "Extreme Makeover" ratings record, featured Judy and Larry Vardon, who are both deaf. The show remodeled their home to accommodate their blind, autistic son Vance, now 16 years old.
The Vardons currently face a monthly house payment of $2,300 and a mortgage rate that has topped 11 percent."Everyone thought the house was paid for," says Gerald Naftaly, the mayor of Oak Park, Mich., where the family lives. "But that wasn't the case. They still had their mortgage. They are just another number with the mortgage company."Vardon, 50, works at Chrysler's Sterling Heights stamping plant. The couple is working with Lighthouse of Oakland County, a nonprofit group that aids families in crisis, to help them negotiate a lower mortgage rate.Source: The Associated Press (12/08/08)
One of the most-watched winners on ABC-TV’s "Extreme Makeover: Home Edition" is about to undergo foreclosure.The Nov. 6, 2004, show, which set an "Extreme Makeover" ratings record, featured Judy and Larry Vardon, who are both deaf. The show remodeled their home to accommodate their blind, autistic son Vance, now 16 years old.
The Vardons currently face a monthly house payment of $2,300 and a mortgage rate that has topped 11 percent."Everyone thought the house was paid for," says Gerald Naftaly, the mayor of Oak Park, Mich., where the family lives. "But that wasn't the case. They still had their mortgage. They are just another number with the mortgage company."Vardon, 50, works at Chrysler's Sterling Heights stamping plant. The couple is working with Lighthouse of Oakland County, a nonprofit group that aids families in crisis, to help them negotiate a lower mortgage rate.Source: The Associated Press (12/08/08)
Low Prices, Low Rates Mean Opportunity
Low Prices, Low Rates Mean Opportunity
Housing prices have fallen dramatically all over the country and rates on 30-year fixed-rate mortgages are already close to 5.5 percent. Experts say it's possible, with government encouragement, that rates will fall as low as 4.5 percent.Now is the time for first-time to step up. Here are some things to consider:
Prices have always softened in the winter. As temperatures fall, bargain hunters will have bigger then usual opportunities.
New homes likely to become scarce. Ian Shepherdson, chief United States economist for the research firm High Frequency Economics, said he believes that a steep drop-off in inventory of new homes is coming soon, thanks to a rapid decrease in home builder activity.
Location. Location. Location. Buying the best-priced house in a really good neighborhood is still smart.
Will values go up? You may have to live in a house for 10 years, but over time, buyers will almost certainly make money.
Housing prices have fallen dramatically all over the country and rates on 30-year fixed-rate mortgages are already close to 5.5 percent. Experts say it's possible, with government encouragement, that rates will fall as low as 4.5 percent.Now is the time for first-time to step up. Here are some things to consider:
Prices have always softened in the winter. As temperatures fall, bargain hunters will have bigger then usual opportunities.
New homes likely to become scarce. Ian Shepherdson, chief United States economist for the research firm High Frequency Economics, said he believes that a steep drop-off in inventory of new homes is coming soon, thanks to a rapid decrease in home builder activity.
Location. Location. Location. Buying the best-priced house in a really good neighborhood is still smart.
Will values go up? You may have to live in a house for 10 years, but over time, buyers will almost certainly make money.
Pending Home Sales Holding Steady
NAR: Pending Home Sales Holding Steady
Pending home sales eased against a deteriorating economic backdrop but remain in a stable range, according to the National Association of Realtors®.The Pending Home Sales Index, a forward-looking indicator based on contracts signed in October, slipped 0.7 percent to 88.9 from an upwardly revised reading of 89.5 in September. It is 1 percent below October 2007 when it was 89.8.“Despite the turmoil in the economy, the overall level of pending home sales has been remarkably stable over the past year, holding in a generally narrow range,” says Lawrence Yun, NAR chief economist. “We did see a spike in August when mortgage conditions temporarily improved, which underscores two things – there is a pent-up demand, and access to safe, affordable mortgages will bring more buyers into the market.”Conditions remain uneven around the country, but some areas that are showing healthy gains in pending home sales from a year ago include many Florida and California markets; Providence, R.I.; Lansing, Mich.; Oklahoma City; and Las Vegas.
By the RegionHere's what the PHSI showed across the country:
South: jumped 7.8 percent to 95.9 in October but remains 2.9 percent below a year ago.
Northeast: rose 0.6 percent to 68.1 but is 14.1 percent below October 2007.
Midwest: declined 4.3 percent to 79.7 in October and is 6.8 percent below a year ago.
West: fell 8.7 percent to 103.7 but is 17.4 percent higher than October 2007.
The Economic ForecastNew-home sales: for 2008 should total 486,000 this year, decline to 393,000 in 2009 and then grow to 446,000 in 2010. Housing starts, including multifamily units, are projected at 934,000 units in 2008 and 731,000 next year before rising to 772,000 in 2010.Existing-home sales: looking at middle-ground assumptions, existing-home sales are forecast to total 4.96 million this year, and then increase to 5.19 million in 2009 and 5.55 million in 2010.Home prices: “Price projections are challenging in an environment with so many variables and divergent local conditions,” Yun says. “The home price correction to date has brought prices in line with fundamentals, but buyer pessimism could cause prices to overshoot downward, resulting in further economic deterioration.” NAR’s housing affordability index is likely to remain quite favorable, averaging 138 in 2009. Unemployment rate: is estimated at 7.2 percent in the first quarter, rising to 8.3 percent by the end of 2009. Inflation: as measured by the Consumer Price Index, is seen at 0.7 percent in 2009. Inflation-adjusted disposable personal income is expected to grow 1.5 percent in 2009.GDP: Yun expects growth in the U.S. gross domestic product (GDP) to contract through the first half of 2009, then stabilize and expand in latter part of the year – lifted by a home sales recovery. “Given the critical role of housing in an economic recovery, we’re confident sufficient stimulus will be offered to bring more buyers to the market,” he says.
Could a Drop in Interest Rates Help? The 30-year fixed-rate mortgage will probably decline to 5.6 percent in the first quarter, rise slowly to 6 percent by the end of 2009, and average 6.2 percent in 2010. NAR President Charles McMillan says he’s hopeful about considerations by the U.S. Treasury to help the housing market. “Efforts to bring down mortgage interest rates demonstrate a clear understanding of the role housing plays in stabilizing the economy,” McMillan says. “We’re very encouraged by all of the proposals getting serious consideration in Washington to help home buyers. More sales will stabilize home prices by bringing down inventory, and would lessen foreclosure pressure.”
Source: NAR
Pending home sales eased against a deteriorating economic backdrop but remain in a stable range, according to the National Association of Realtors®.The Pending Home Sales Index, a forward-looking indicator based on contracts signed in October, slipped 0.7 percent to 88.9 from an upwardly revised reading of 89.5 in September. It is 1 percent below October 2007 when it was 89.8.“Despite the turmoil in the economy, the overall level of pending home sales has been remarkably stable over the past year, holding in a generally narrow range,” says Lawrence Yun, NAR chief economist. “We did see a spike in August when mortgage conditions temporarily improved, which underscores two things – there is a pent-up demand, and access to safe, affordable mortgages will bring more buyers into the market.”Conditions remain uneven around the country, but some areas that are showing healthy gains in pending home sales from a year ago include many Florida and California markets; Providence, R.I.; Lansing, Mich.; Oklahoma City; and Las Vegas.
By the RegionHere's what the PHSI showed across the country:
South: jumped 7.8 percent to 95.9 in October but remains 2.9 percent below a year ago.
Northeast: rose 0.6 percent to 68.1 but is 14.1 percent below October 2007.
Midwest: declined 4.3 percent to 79.7 in October and is 6.8 percent below a year ago.
West: fell 8.7 percent to 103.7 but is 17.4 percent higher than October 2007.
The Economic ForecastNew-home sales: for 2008 should total 486,000 this year, decline to 393,000 in 2009 and then grow to 446,000 in 2010. Housing starts, including multifamily units, are projected at 934,000 units in 2008 and 731,000 next year before rising to 772,000 in 2010.Existing-home sales: looking at middle-ground assumptions, existing-home sales are forecast to total 4.96 million this year, and then increase to 5.19 million in 2009 and 5.55 million in 2010.Home prices: “Price projections are challenging in an environment with so many variables and divergent local conditions,” Yun says. “The home price correction to date has brought prices in line with fundamentals, but buyer pessimism could cause prices to overshoot downward, resulting in further economic deterioration.” NAR’s housing affordability index is likely to remain quite favorable, averaging 138 in 2009. Unemployment rate: is estimated at 7.2 percent in the first quarter, rising to 8.3 percent by the end of 2009. Inflation: as measured by the Consumer Price Index, is seen at 0.7 percent in 2009. Inflation-adjusted disposable personal income is expected to grow 1.5 percent in 2009.GDP: Yun expects growth in the U.S. gross domestic product (GDP) to contract through the first half of 2009, then stabilize and expand in latter part of the year – lifted by a home sales recovery. “Given the critical role of housing in an economic recovery, we’re confident sufficient stimulus will be offered to bring more buyers to the market,” he says.
Could a Drop in Interest Rates Help? The 30-year fixed-rate mortgage will probably decline to 5.6 percent in the first quarter, rise slowly to 6 percent by the end of 2009, and average 6.2 percent in 2010. NAR President Charles McMillan says he’s hopeful about considerations by the U.S. Treasury to help the housing market. “Efforts to bring down mortgage interest rates demonstrate a clear understanding of the role housing plays in stabilizing the economy,” McMillan says. “We’re very encouraged by all of the proposals getting serious consideration in Washington to help home buyers. More sales will stabilize home prices by bringing down inventory, and would lessen foreclosure pressure.”
Source: NAR
Tuesday, December 9, 2008
Weekly Market Activity Report
Weekly Market Activity Report
As we mentioned last week, the presence of Thanksgiving in our reporting dates is throwing off the weekly numbers considerably for last week and this week. After last week's numbers showed massive increases in listings and sales over last year, this week's numbers predictably show large decreases. For the week ending November 29, new listings fell by 45.2 percent compared to last year, while pending sales fell by 20.5 percent. Check back next week when we return to a more reliable year-over-year comparison.
This week's edition of the Weekly Market Activity Report features updated figures for some important metrics. The Housing Affordability Index shot up 19 points to 180 thanks to the recent healthy declines in mortgage interest rates and a continued softening in home prices; the HAI has not been this attractive since we began tracking data in 1990. Days on Market Until Sale grew to 149, nearly dead-even with last year, while Percent of Original List Price Received at Sale fell to 90.1 percent. The Months Supply of Inventory slipped to 8.5 months, and has dropped 19 percent since August's showing of 10.5 months. This is 8.6 percent lower than at this time last year.
As we mentioned last week, the presence of Thanksgiving in our reporting dates is throwing off the weekly numbers considerably for last week and this week. After last week's numbers showed massive increases in listings and sales over last year, this week's numbers predictably show large decreases. For the week ending November 29, new listings fell by 45.2 percent compared to last year, while pending sales fell by 20.5 percent. Check back next week when we return to a more reliable year-over-year comparison.
This week's edition of the Weekly Market Activity Report features updated figures for some important metrics. The Housing Affordability Index shot up 19 points to 180 thanks to the recent healthy declines in mortgage interest rates and a continued softening in home prices; the HAI has not been this attractive since we began tracking data in 1990. Days on Market Until Sale grew to 149, nearly dead-even with last year, while Percent of Original List Price Received at Sale fell to 90.1 percent. The Months Supply of Inventory slipped to 8.5 months, and has dropped 19 percent since August's showing of 10.5 months. This is 8.6 percent lower than at this time last year.
Monday, December 8, 2008
Low Mortgage Rates Sparks Refinances and Home Sales
Low Mortgage Rates Sparks Refinances and Home Sales
Mortgage rates moved even lower this week, helped by economic weakness and recent actions by the Fed and the Treasury. Conforming fixed-rate mortgage rates dropped to levels last seen in 2003. According to Freddie Mac, the weekly decline in rates was the largest since 1981, over its Wednesday to Wednesday measurement period. Mortgage applications for both refinances and purchases where up measurably. Now may be the right time for you to examine purchasing or refinancing. Contact us for a consultation.
The Fed and the Treasury are looking at additional programs to boost the economy. On Wednesday, the Treasury confirmed that it is considering a plan which would offer below-market mortgage rates for select loans used to purchase homes. The lower rates would not be available for refinancing loans. At this point, it's not certain if, when, or in what form this latest idea will be acted upon. As we have seen recently, most notably with the $700 billion TARP rescue plan, government programs often change significantly before their implementation.
On the economic front, the November Employment data was even worse than expected. The economy suffered the largest monthly loss of jobs since 1974. In addition, the figures from October and September were revised sharply lower. The Unemployment Rate rose from 6.5% to 6.7%, the highest level since October 1993. The manufacturing and construction sectors continued to shed jobs, and the service sector was hit hard as well. The weak report makes additional fiscal stimulus programs more likely.
Mortgage rates moved even lower this week, helped by economic weakness and recent actions by the Fed and the Treasury. Conforming fixed-rate mortgage rates dropped to levels last seen in 2003. According to Freddie Mac, the weekly decline in rates was the largest since 1981, over its Wednesday to Wednesday measurement period. Mortgage applications for both refinances and purchases where up measurably. Now may be the right time for you to examine purchasing or refinancing. Contact us for a consultation.
The Fed and the Treasury are looking at additional programs to boost the economy. On Wednesday, the Treasury confirmed that it is considering a plan which would offer below-market mortgage rates for select loans used to purchase homes. The lower rates would not be available for refinancing loans. At this point, it's not certain if, when, or in what form this latest idea will be acted upon. As we have seen recently, most notably with the $700 billion TARP rescue plan, government programs often change significantly before their implementation.
On the economic front, the November Employment data was even worse than expected. The economy suffered the largest monthly loss of jobs since 1974. In addition, the figures from October and September were revised sharply lower. The Unemployment Rate rose from 6.5% to 6.7%, the highest level since October 1993. The manufacturing and construction sectors continued to shed jobs, and the service sector was hit hard as well. The weak report makes additional fiscal stimulus programs more likely.
Monday, December 1, 2008
Treasury Announce Plan to Jumpstart Lending
Daily Real Estate News November 26, 2008
Share Fed, Treasury Announce Plan to Jumpstart Lending
The Federal Reserve and Treasury Department on Tuesday unveiled hundreds of billions more in money they are pumping into the struggling U.S. economy, trying to jumpstart lending by the nation's banks for mortgages and consumer debt.
Together, the programs from the Federal Reserve and the New York Fed aim to dump $800 billion in additional funds into the struggling U.S. economy, more than Congress approved in October for a bailout of the nation's banks and Wall Street firms.
The NATIONAL ASSOCIATION OF REALTORS® said the actions will free up money on main street and lower long-term interest rates, which in turn will boost home sales.
"This is great news for home buyers and sellers and we applaud the Fed for taking this historic step,” said NAR President Charles McMillan. “Housing recovery is the key to economic recovery in this country and it always has been.” (Read the full NAR statement.)
Under the plan, the Federal Reserve announced it will purchase up to $500 billion in mortgage-backed securities that have been backed by Fannie Mae, Freddie Mac, and closely held Ginnie Mae, the three government-sponsored mortgage finance firms set up to promote homeownership. It will also buy another $100 billion in direct debt issued by those firms.
"This action is being taken to reduce the cost and increase the availability of credit for the purchase of houses, which in turn should support housing markets and foster improved conditions in financial markets more generally," said the statement from the Fed.
By putting money in the hands of holders of consumer and mortgage loan securities, the government hopes more money will flow to consumers than has occurred so far in previous bailout plans.
The moves came as the Commerce Department announced that gross domestic product, the broad measure of the nation's economy, fell at an annual rate of 0.5% in the third quarter, the biggest drop in economic activity in seven years. Economists believe that the economy is likely to continue to contract in the current quarter and into early next year.
Source: Chris Isidore, CNNMoney.com (11/25/08), NAR
Share Fed, Treasury Announce Plan to Jumpstart Lending
The Federal Reserve and Treasury Department on Tuesday unveiled hundreds of billions more in money they are pumping into the struggling U.S. economy, trying to jumpstart lending by the nation's banks for mortgages and consumer debt.
Together, the programs from the Federal Reserve and the New York Fed aim to dump $800 billion in additional funds into the struggling U.S. economy, more than Congress approved in October for a bailout of the nation's banks and Wall Street firms.
The NATIONAL ASSOCIATION OF REALTORS® said the actions will free up money on main street and lower long-term interest rates, which in turn will boost home sales.
"This is great news for home buyers and sellers and we applaud the Fed for taking this historic step,” said NAR President Charles McMillan. “Housing recovery is the key to economic recovery in this country and it always has been.” (Read the full NAR statement.)
Under the plan, the Federal Reserve announced it will purchase up to $500 billion in mortgage-backed securities that have been backed by Fannie Mae, Freddie Mac, and closely held Ginnie Mae, the three government-sponsored mortgage finance firms set up to promote homeownership. It will also buy another $100 billion in direct debt issued by those firms.
"This action is being taken to reduce the cost and increase the availability of credit for the purchase of houses, which in turn should support housing markets and foster improved conditions in financial markets more generally," said the statement from the Fed.
By putting money in the hands of holders of consumer and mortgage loan securities, the government hopes more money will flow to consumers than has occurred so far in previous bailout plans.
The moves came as the Commerce Department announced that gross domestic product, the broad measure of the nation's economy, fell at an annual rate of 0.5% in the third quarter, the biggest drop in economic activity in seven years. Economists believe that the economy is likely to continue to contract in the current quarter and into early next year.
Source: Chris Isidore, CNNMoney.com (11/25/08), NAR
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