This is great news for nearly everybody. I’ve always said, we don’t get out of this hole until real estate is out of it – good news for Jersey City Downtown, Heights, Journal Square and Hoboken condo owners!
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This is great news for nearly everybody. I’ve always said, we don’t get out of this hole until real estate is out of it – good news for Jersey City Downtown, Heights, Journal Square and Hoboken condo owners!
The latest industry news offers an encouraging outlook for homebuyers and sellers:
• Every state has had double-digit, year-over-year declines in foreclosure inventory, according to the CoreLogic February 2014 National Foreclosure Report.
• Fannie Mae’s March 2014 National Housing Survey showed that 38 percent of people surveyed say that it is a good time to sell a home, up from 26 percent a year ago.
• Vacation-home sales jumped almost 30 percent in 2013, according to NAR’s 2014 Investment and Vacation Home Buyers Survey.
Buyers have found the market for condos in downtown Jersey City and Hoboken for sale to be exasperating. I recently was involved in a transaction that had 15 offers on it! Homes are still going for over asking, and though there will likely be no price slide, buyers are beginning to have more selection than previously. Albeit the link below is national news, and real estate is a very local thing, my hope is the trend is to have more inventory here too. I haven’t seen it yet, but it doesn’t mean it isn’t coming. Downtown Jersey City and Hoboken condos for sale have an incredibly short shelf life and multiple offers are still the norm. That said, I think buyers have to ask themselves why this is. The answer, simply, is that this is a great time to buy – prices are lower than they will be next year, as is interest. That said, it’s also a good time to sell – the next home you are buying is also lower in price than it will be next year, and you’ll save on interest for 30 years
A majority of more than 100 forecasters says they expect large-scale investors to sell off the bulk of homes in their portfolios in the next three to five years, boosting inventory and potentially contributing to a smoother market ahead, according to the latest Zillow® Home Price Expectations Survey. On average, panelists also say they expected nationwide home value appreciation of 4.5 percent this year, with a steady slowdown in appreciation rates each year through 2018.
The survey of 110 economists, real estate experts and investment and market strategists asked panelists to predict the path of the U.S. Zillow Home Value Indexi through 2018 and solicited opinions on investor activity and federal monetary policy. The survey was sponsored by leading real estate information marketplace Zillow, Inc. and is conducted quarterly by Pulsenomics LLC.
Throughout the recovery, large-scale investors have purchased thousands of homes nationwide, particularly lower-priced vacant and foreclosed homes, fixing them up and keeping them in their portfolios as rental properties. This investor activity helped put a floor under sales volumes during the depth of the housing recession, but also created competition for many would-be buyers and contributed to rapid price spikes in some areas.
Panelists were asked to assess the impact to the market if these institutional investors were to significantly curtail their activity this year. Among those panelists expressing an opinion, 79 percent says the impact would be significant or somewhat significant. Panelists were also asked when they thought these investors will have sold the majority of homes in their portfolios. Among those with an opinion, 57 percent says they expected this to occur in the next three to five years.
“Real estate investors, both large and small, played a crucial role in helping to stabilize markets during the darkest days of the housing recession, but a decline in investor activity now isn’t necessarily a bad thing, and could have real benefits for buyers,” says Zillow Chief Economist Dr. Stan Humphries. “Buyers entering the market in the next few months will not be competing with cash-rich investors like they were last year which should be some small solace given the higher prices andmortgage rates that they will encounter. The gradual decline of investor activity should be viewed as another sign of the market slowly returning to normal, and I agree with the panel’s expectations that there will not be a rush for the exit by institutional investors.”
Panelists were also asked when the Federal Reserve should end its ongoing stimulus efforts, known as “quantitative easing.” Since September 2012, the Fed has been purchasing tens of billions of dollars worth of Treasury bonds and mortgage securities each month, which has helped keep mortgage interest rates low and stimulate demand. The program is now being wound down.
“Mortgage rates have been riding a rally in U.S. Treasury securities caused by volatility in emerging markets in recent weeks, so the impact of Fed tapering on the housing market has been minimal thus far,” says Pulsenomics Founder, Terry Loebs. “More than 70 percent of the experts want to see the monetary stimulus reduced to zero before the end of this year, and the current pace of tapering will get us there. Of course, whether Janet Yellen’s Fed will maintain the current pace as new economic challenges arise remains an open question.”
Appreciation Expected to Normalize through 2018
On average, panelists says they expect nationwide home value appreciation of 4.5 percent through the end of this year, a pace that exceeds historically normal annual appreciation rates of around 3 percent. This appreciation is expected to slow to roughly 3.8 percent in 2015 and 3.3 percent by 2018, rates much more in line with historic norms.
Based on current expectations for home value appreciation during the next five years, panelists predicted that overall U.S. home values could exceed their April 2007 peak by the first quarter of 2018, and may cross the $200,000 threshold by the third quarter of 2018.
The most optimistic groupii of panelists predicted a 5.6 percent annual increase in home values this year, on average, while the most pessimisticiii predicted an average increase of 3.4 percent. The most optimistic panelists predicted home values would rise roughly 10.6 percent above their 2007 peaks by the end of 2018, on average, while the most pessimistic says they expected home values to remain about 4.5 percent below 2007 peaks.
Nationwide housing starts were virtually unchanged in February, inching down 0.2 percent to a seasonally adjusted annual rate of 907,000 units, according to newly released data from the U.S. Department of Housing and Urban Development and U.S. Census Bureau.
Continuing the January trend and in line with our recent surveys, builders are in a holding pattern says Kevin Kelly, chairman of the National Association of Home Builders (NAHB) and a home builder and developer from Wilmington, Del. Poor weather is keeping many from getting into the field and they continue to face challenges related to a shortage of lots and labor.
While housing construction is in a recent lull due to unusual weather conditions, we expect to see an improvement as the winter weather pattern subsides and builders prepare for the spring selling season, says NAHB Chief Economist David Crowe. Competitive mortgage rates, affordable home prices and an improving economy all point to a continuing, gradual strengthening of housing activity through the rest of the year. Moreover, building permits, which are less dependent on weather and are a harbinger of future building activity, rose above 1 million units in February. Single-family housing construction rose 0.3 percent in February to a seasonally adjusted annual rate of 583,000 units while multifamily starts edged 2.5 percent lower to a 312,000-unit pace.
Regionally, combined housing starts activity was mixed in the month, posting gains of 34.5 percent in the Midwest and 7.3 percent in the South and declines of 37.5 percent in the Northeast and 5.5 percent in the West.
Issuance of new building permits rose 7.7 percent to a seasonally adjusted annual rate of 1.02 million units in February. Single-family permits edged down 1.8 percent to 588,000 units and multifamily permits rose 27.6 percent to 407,000 units. Regionally, overall permits rose 6.3 percent in the Northeast, 9.9 percent in the South and 17.9 percent in the West but declined 11.8 percent in the Midwest.
Mortgage applications decreased 1.2 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending March 14, 2014.
The Market Composite Index, a measure of mortgage loan application volume, decreased 1.2 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 1 percent compared with the previous week. The Refinance Index decreased 1 percent from the previous week. The seasonally adjusted Purchase Index also decreased 1 percent from one week earlier. The unadjusted Purchase Index was essentially unchanged compared with the previous week and was 15 percent lower than the same week one year ago.
The refinance share of mortgage activity decreased for the sixth straight week to 56.5 percent of total applications from 57 percent the previous week. The adjustable-rate mortgage (ARM) share of activity remained unchanged at 8 percent of total applications.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) decreased to 4.50 percent from 4.52 percent, with points decreasing to 0.26 from 0.29 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The effective rate decreased from last week.
The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $417,000) decreased to 4.39 percent from 4.41 percent, with points decreasing to 0.19 from 0.20 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.
The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased to 4.13 percent from 4.18 percent, with points decreasing to 0.18 from 0.21 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.
The average contract interest rate for 15-year fixed-rate mortgages decreased to 3.52 percent from 3.53 percent, with points decreasing to 0.25 from 0.28 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.
The average contract interest rate for 5/1 ARMs decreased to 3.09 percent from 3.18 percent, with points increasing to 0.38 from 0.36 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.
For more information, visit www.mba.org.
The qualified mortgage (QM) rule that took effect in January will raise mortgage rates by at least 150 percentage points according to a survey of lenders released recently.
A survey by economists at the National Association of REALTORS® found that borrowers who cannot qualify for QM status because of their credit histories will pay a big price in higher mortgage rates.
The survey found that all non-QM borrowers will suffer but those with lower FICO scores will suffer more. One third of survey respondents indicated that rates for borrowers with non-QM loans and FICO scores between 640 and 720 as well as those with scores greater than 720 would face rate increases of 50 to 75 basis points. The distribution of respondents in the survey suggested prime borrowers will get better pricing than near prime.
However, 50 percent of respondents indicated that borrowers with FICO scores of 640 and below would face rate increases of 150 basis points or more. No respondents indicated the rate increase would be less than 50 to 75 basis points for FICOs of 640 or less and no respondent indicated that rates would not rise for non-QM borrowers.
The QM Rule took effect in January and is the first of two rules from the Dodd–Frank legislation that will directly impact the housing market. It is intended to protect consumers by strengthening underwriting standards, but some have argued that the rules will raise costs and reduce access for consumers.
For more information, visit www.realestateeconomywatch.com.
Freddie Mac recently released the results of its Primary Mortgage Market Survey® (PMMS®), showing average fixed mortgage rates edging up following a week with little new economic and housing news.
"Mortgage rates edged up amid a week of light economic reports,” says Frank Nothaft, vice president and chief economist, Freddie Mac. “Of the few releases, the economy added 175,000 jobs in February, which was above the market consensus forecast and followed an upward revision of 25,000 jobs for the prior two months. Meanwhile, the unemployment rate nudged up to 6.7 percent, the first rate increase in over a year."
Results show that the 30-year fixed-rate mortgage (FRM) averaged 4.37 percent with an average 0.6 point for the week ending March 13, 2014, up from last week when it averaged 4.28 percent. A year ago at this time, the 30-year FRM averaged 3.63 percent.
Additionally, the 15-year FRM this week averaged 3.38 percent with an average 0.6 point, up from last week when it averaged 3.32 percent. A year ago at this time, the 15-year FRM averaged 2.79 percent.
The 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 3.09 percent this week with an average 0.4 point, up from last week when it averaged 3.03 percent. A year ago, the 5-year ARM averaged 2.61 percent.
The 1-year Treasury-indexed ARM averaged 2.48 percent this week with an average 0.4 point, down from last week when it averaged 2.52 percent. At this time last year, the 1-year ARM averaged 2.64 percent.
For more information, visit www.FreddieMac.com.
Millions of current renters nationwide aspire to buy a home in the next year, according to the inaugural edition of the Zillow Housing Confidence Index (ZHCI)[i], suggesting strong demand among potential first time homebuyers if market conditions are favorable. But existing headwinds, including tight inventory, rising mortgage interest rates and growing affordability problems in a handful of areas, may make it difficult for potential buyers to follow through on those aspirations as the market enters the busy spring home shopping.
In 19 of the 20 large metro areas surveyed, more than 5 percent[ii] of all residents indicated they wanted to buy a home in the next year. Among current renters, homeownership aspirations were particularly strong, with about 10 percent of all renters nationwide saying they would like to buy within the next 12 months. The vast majority of these respondents also said they were confident or somewhat confident they could afford homeownership now[iii]. If all renters that indicated they wanted to buy actually did purchase a home in the next year, it would represent more than 4.2 million firsttime home sales[iv], more than double the roughly 2.1 million firsttime home buyers in 2013.
Homeownership aspirations among current renters were the highest in Miami, Atlanta and Las Vegas, three metro areas that were among the hardest hit by the housing recession, according to the Zillow Homeownership Aspirations Index (ZHAI), a component of the broader ZHCI.
But despite strong desires to own a home, market conditions remain mixed for potential buyers. While inventory is up nationally compared to a year ago (up 11.1 percent), it still remains well below optimal levels, and has fallen yearoveryear in eight of the 20 metro areas surveyed by the ZHCI. Recent data from the Census Bureau also indicates that builders are currently building more multifamily rental housing, rather than the entrylevel homes today’s renters will likely be looking to buy in coming months.
Mortgage interest rates are also on the rise, currently standing at about 4.2 percent nationally, according to the Zillow Mortgage Marketplace, well above 2013 lows of roughly 3.3 percent. And as interest rates rise, homes in a number of particularly hot markets, including San Francisco, Los Angeles, San Jose and San Diego, are already looking unaffordable for buyers with lower incomes, especially firsttime buyers, as more income is devoted to mortgage payments.
“For the housing market to continue its recovery, it is critical that homes are both available and remain affordable to meet the strong demand these survey results are predicting, particularly from first time homebuyers,” said Zillow Chief Economist Dr. Stan Humphries. “Even after a wrenching housing recession, this data shows that the dream of homeownership remains very much alive and well, even in those areas that were hardest hit. But these aspirations must also contend with the current reality, and in many areas, conditions remain difficult for buyers. The market is moving toward more balance between buyers and sellers, but it is a slow and uneven process.”
The Zillow Housing Confidence Index, sponsored by Zillow and developed by Pulsenomics LLC, is measured on a 0 to 100 scale, with readings above 50 indicating positive sentiment. The overall ZHCI for the U.S. stood at 63.7 at the start of the year[v]. Of the 20 metro areas surveyed, 11 had individual confidence levels higher than the U.S. as a whole. The overall U.S. ZHAI among all households, which measures consumers’ plans to buy and their attitudes toward the social value of homeownership, stood at 62.4.
“While it is reassuring to see all of the headline ZHCIs in positive territory, the underlying indicators of homeownership aspirations, housing market conditions and expectations for each metro area and tenure segment reveal significant variability,” said Pulsenomics
Founder Terry Loebs. “Several of these drivers of overall housing confidence registered negative or only marginally positive readings in some cities. These data confirm that real estate recovery and economic healing are relative, local phenomena, and in some instances, likely reflect the lingering psychological impact of the housing bust.”
[i] The ZHCI is computed by Pulsenomics from data compiled by the Zillow sponsored U.S. Housing Confidence Survey (HCS), consisting of more than 10,000 interviews with adult landline and cellphone users nationwide, collecting more than 300,000 consumer responses pertaining to the real estate market where each survey respondent lives. The headline Housing Confidence Index is comprised of three subindices: the Housing Market Conditions Index, measuring recent and prevailing home value trends and current buying/selling conditions; the Housing Expectations Index, which gauges expected changes in local home values, the overall affordability of homeownership and the relative value of homeownership; and the Homeownership Aspirations Index, which measures consumers’ plans to buy and their attitudes toward the social value of homeownership. To view [or download] all 256 index values that comprise the ZHCI data set, or to learn more about the ZHCI calculation methodology, please visit Zillow.com/research or pulsenomics.com.
[ii] At least 500 HCS questionnaires are completed within each of the 20 metropolitan areas where Pulsenomics conducts this survey research. For each edition of the HCS, Pulsenomics compiles more than 300,000 response data points that are recorded within the 10,000 completed questionnaires. At a 95% confidence interval, the theoretical margin of sampling error for an aggregated, householdweighted sample of 10,000 (comprised of 20 metrolevel probability samples of 500 each) is +/ 1.2%. The theoretical margin of sampling error for a probability sample of 500 drawn from a single U.S. metro area population is +/4.4%.
[iii] In 17 of 20 metros surveyed, at least 90 percent of surveyed renters who said they want to buy in the coming year indicated they were “confident” or “somewhat confident” they could afford it.In Seattle, 82 percent indicated confidence, and in Dallas and San Francisco, 84 percent indicated confidence.
The Fannie Mae National Housing Survey indicates that more folks think nationally home prices will rise. Which means, of course, they will as that is a self-fulfilling prophecy to some extent. Read more here: