30-Year Mortgage Rates Dip for Third Week

30-Year Mortgage Rates Dip for Third Week

Is an Assumable Mortgage Right for You?

Is an Assumable Mortgage Right for You?

Homebuyers Should Understand Private Mortgage Insurance

Homebuyers Should Understand Private Mortgage Insurance

South Florida Buyers, Renters to See Positive 2024 Changes

South Florida Buyers, Renters to See Positive 2024 Changes

Fannie Mae Sees Positive Home Price Growth Through 2025

Fannie Mae Sees Positive Home Price Growth Through 2025

Gov. Signs My Safe Florida Home and Other Bills

Gov. Signs My Safe Florida Home and Other Bills

67% of Buyers Willing to Live with Ghost Roommate

67% of Buyers Willing to Live with Ghost Roommate: How hard is it to find the perfect home? If it has the right location and price, 7 out of 10 homebuyers are willing to overlook poltergeist shenanigans.

The 80/20 Rule – Intro to Mortgage Insurance

The 80/20 Rule – Intro to Mortgage Insurance

If Buyers Want to Save Money: Tell Them to Shop

DAILY REAL ESTATE NEWS | FRIDAY, APRIL 28, 2017

Home buyers who don’t gather more than one quote when shopping for a mortgage may be losing out on some savings to their monthly payments.

Read more: Consumers Turn to Non-Banks for Mortgages

Lenders can offer a wide dispersion of rates, up to 50 basis points or 0.5 percent, after controlling for factors like the borrower’s down payment and credit score. That could be the difference between a 3.5 percent versus a 4 percent mortgage rate, according to a recent study by two economists at the Consumer Financial Protection Bureau, who culled mortgage data from 2014.

The authors offer up a scenario of what would happen if consumers had done an additional search for rate offers. Just one extra search could potentially reduce a borrower’s monthly payment by $8.63, on average. Adding five more searches could help them reduce their payments by $17.03 per month (that’s about $204 over just one year in savings). That said, the borrower’s initial offer may end up being the strongest in some cases, despite additional searches, the authors also note.

But in general, the researchers say that borrowers’ shopping around forces lenders to compete and likely will reduce the costs the borrower will end up paying.

“Tell your clients, especially first-time buyers, to shop more,” notes the National Association of REALTORS® Economists’ Outlook blog, interpreting the study’s results. “It may save them money. They should use websites that quote multiple lenders and get multiple offers on their own from large retail lenders, smaller banks or credit unions, and mortgage banks. But always consider the total cost, which includes the lenders’ fees and other services.”

Source: “Sometimes, Shopping Will Save Your Clients Money!” National Association of REALTORS® Economists’ Outlook blog (April 25, 2017)

When does an investment become a second home?

 

Feb. 20, 2017 – Question: My primary residence is in Florida. I have owned and rented a condo in Hawaii since 2004. If I stopped renting the condo and lived in it for half the year, would my condo be considered a second home? Would there be tax consequences? – Name not provided

Answer: If you lived in the condo half the year and no longer rented it, it would be a second home. You could deduct any mortgage interest and real estate taxes paid on the condo as part of your itemized deductions. You should maintain the depreciation schedule for your records because when you sell the property, depreciation factors can reduce your cost basis.

When you sell a rental property at a loss, you can deduct the loss. When you sell a second home, the loss is considered personal and is not deductible. In both cases, a gain on the sale would be taxable. – Paula Taylor

© 2017 The Orlando Sentinel (Orlando, Fla.); Paula Taylor, CFP, contributes to the Orlando Sentinel's Ask an Expert series. Distributed by Tribune Content Agency, LLC.

Quicken quietly offers 1% downpayment loans

 

NEW YORK – June 29, 2016 – Quicken Loans has been fairly hush about its latest offering of a super low downpayment mortgage, even as rival bank giants like Bank of America, Wells Fargo and JPMorgan Chase all tout their new 3 percent down mortgage products. But late last year, Quicken Loans quietly began offering 1 percent downpayment mortgages.

The program emerged from a partnership between Quicken and Freddie Mac in October 2015 and was structured as part of Freddie Mac's Home Possible Advantage program, which requires a 3 percent downpayment.

However, Quicken Loans offers its customers a 1 percent down because it grants the extra money to the borrower, Bill Banfield, Quicken Loans' vice president of capital markets, told HousingWire in an interview.

"We require 1 percent from a consumer and we give the consumer a 2 percent grant, so the client has 3 percent equity immediately," Banfield told HousingWire.

The 1 percent downpayment loans are available only for those purchasing a home, and they can only be used on a single-family home or condo – second home and investment properties or co-ops aren't included. They must have a FICO score of 680 or above and earn less than the median income for their county. Their debt-to-income ratio must be 45 percent or less.

"We want to try to help people and do it in a smart way," Banfield told HousingWire. "For us, it was really a question of, if you want to provide access to credit, how do you do it responsibly? How can you help people? If first-time buyers are struggling, are there smart ways to help them while still balancing access to credit? … We wanted to have a conventional option to get people into more homes."

Source: "Quicken Loans Now Offering 1% Down Mortgages," HousingWire (June 24, 2016)

© Copyright 2016 INFORMATION, INC. Bethesda, MD (301) 215-4688

NAR: Pending homes sales at a 10-year high

NAR: Pending home sales at a 10-year high

 

WASHINGTON – May 26, 2016 – Pending home sales rose for the third consecutive month in April and reached their highest level in over a decade, according to the National Association of Realtors® (NAR).

All major regions saw gains in contract activity last month except for the Midwest, which saw a meager decline.

The Pending Home Sales Index – a forward-looking indicator based on contract signings for homes that have not yet sold – hiked 5.1 percent higher to 116.3 in April from an upwardly revised 110.7 in March. Year-to-year, it's 4.6 percent above April 2015 (111.2).

After last month's gain, the index has now increased year-over-year for 20 consecutive months. Vast gains in the South and West propelled April's pending sales in April to its highest level since February 2006 (117.4), says Lawrence Yun, NAR chief economist.

"The ability to sign a contract on a home is slightly exceeding expectations this spring, even with the affordability stresses and inventory squeezes affecting buyers in a number of markets," Yun says. "The building momentum from the over 14 million jobs created since 2010 and the prospect of facing higher rents and mortgage rates down the road appear to be bringing more interested buyers into the market."

Mortgage rates have remained below 4 percent in 16 of the past 17 months, but Yun says it remains to be seen how long they will stay this low. Along with rent growth, rising gas prices – and the fading effects of last year's cheap oil on consumer prices – could edge up inflation and push rates higher. For now, Yun foresees mortgage rates continuing to hover around 4 percent in coming months, but inflation could potentially surprise the market and cause rates to increase suddenly.

"Even if rates rise soon, sales have legs for further expansion this summer if housing supply increases enough to give buyers an adequate number of affordable choices during their search," adds. Yun.

Following the housing market's best first quarter of existing-sales since 2007 (5.66 million) and a decent increase (1.7 percent) in April, Yun expects sales this year to climb above earlier estimates and be around 5.41 million – a 3.0 percent boost from 2015. After accelerating to 6.8 percent a year ago, national median existing-home price growth is forecast to slightly moderate to between 4 and 5 percent.

Pending sales in the Northeast climbed 1.2 percent to 98.2 in April, and are now 10.1 percent above a year ago. In the Midwest, the index declined slightly (0.6 percent) to 112.9 in April, but it's still 2.0 percent above April 2015.

Pending home sales in the South jumped 6.8 percent to an index of 133.9 in April – 5.1 percent higher than last April. The index in the West soared 11.4 percent in April to 106.2, and it's now 2.8 percent above a year ago.

© 2016 Florida Realtors®  

Related Topics: Home sa

The New-Home Market Leads the Charge

Keeping you updated on the market! For the week of June 22, 2015

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MARKET RECAP The New-Home Market Leads the Charge Many commentators were disappointed in the headline number, but they shouldn't have been. The headline states that housing starts posted at 1.036 million on an annualized rate for May. The consensus was looking for starts to post in the 1.1-million neighborhood. If we compare May with April, we see an 11.1% drop-off in starts. The numbers appear disappointing, until you dig a little deeper. April, which was already a strong month for starts, was revised up to 1.165 million. That's a 22.1% month-over-month increase when compared to March. Seeing starts throttle back in May after such a strong showing is no reason to sulk. Indeed, it should be expected. To expect continual double-digit monthly increases is to expect the impossible. The trend in permits is another reason to embrace the future. Permits were up a very stout 11.8% to 1.275 million potential starts. Permits are a leading indicator, and this leading indicator posted its best number since August 2007. Given the bullish outlook on new-home construction, no one should be surprised that homebuilders are feeling upbeat these days. The NAHB Home Builder Index spiked five points to 59 in June. This is the highest reading since September 2014. To be sure, sentiment can change and markets can turn. But for the past year, home builders have become increasingly upbeat. Sales and construction activity has generally supported rising optimism. We don't expect that to change over the remainder of 2015. Of course, the percentage of new-home sales is relatively small compared to existing-home sales. Our bread is mostly buttered on existing-home sales. On that front, sales have trended higher in recent months. Still, they've had a tough time hanging about the important five-million mark on an annualized rate. The good news is that it appears more likely that sales will hover above five million. A recent report from CoreLogic shows that another 254,000 residential properties regained positive equity in the first quarter. This trend of rising positive equity ensures more supply will come to market, which will lead to a rising sales trend. What's more, the Federal Reserve appears willing to maintain an accommodating stance. We've said repeatedly since the beginning of the year that a Fed interest-rate hike was unlikely for June. In the latest Fed meeting, officials showed no inclination to raise the federal funds rates. What's more, it remains unlikely the fed funds rate will be raised before fall. The Fed is still looking for labor-market improvement (mostly wage growth) and more consumer-price inflation. And when the Fed does move to raise the fed fund rates, it will likely do so in very small increments. That said, let's not take this as a guarantee of low mortgage-lending rates. The market can and has overridden Fed desires. The Fed might not move to raise interest rates; this doesn't mean the market won't.

 

Economic Indicator	Release Date and Time	Consensus Estimate	Analysis
Existing Home Sales (May)	Mon., June 22, 10:00 am, ET	5.23 Million (Annualized)	Important. Data on equity and housing formations point to rising sales.
New Home Sales (May)	Tues., June 23, 10:00 am, ET	525,000 (Annualized)	Important. Trends in starts and builder optimism will lead to rising sales.
Mortgage Applications	Wed., June 24, 7:00 am, ET	None	Important. Purchase activity should hold the higher levels established in recent months.
Personal Income (May)	Thurs., June 25, 8:30 am, ET	0.4% (Increase)	Important. Wage growth is accelerating and portends strength in home sales.

 

Should We Start Worrying About Bubbles? With home prices exceeding pre-bubble highs in many markets, more people are asking: Should we be concerned about another market bubble? There are no guarantees, but this market looks significantly less frothy than it did in early 2008. For one, mortgage-debt levels remain reasonable. Bank of America reports that mortgage debt as a percentage of real estate owned was at an all-time high of 63% just before the market-bubble burst. Today, it's down at 44%, which is a normalized and sustainable percentage. A more obscure indicator also points to a bubble-free market. When markets get bubbly, they induce a tsunami of new participants. Using California as a proxy for the whole, CalculatedRiskBlog.com data show that the number of real estate agents peaked at the end of 2007. Today, the number of salesperson licenses is off 33.5% of the peak. The number is at March 2004 levels. In other words, people aren't blindly rushing into a perceived gold rush. That's a sign of market health. In short, we don't see a market distorted by bubbles. To the contrary, we see a clearly sustainable market.

Article Courtesy of Patti Wilson, American Momentum Bank.

A Funny Thing Happened to Mortgage Rates

Keeping you updated on the market! For the week of June 8, 2015

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MARKET RECAP A Funny Thing Happened to Mortgage Rates Depending on the survey you review, mortgages remain at year-to-date highs or hit new year-to-date highs over the past week. Freddie Mac's survey shows rates were mostly unchanged from the previous week, with the 30-year fixed-rate mortgage averaging 3.87%. Bankrate.com, in contrast, has the 30-year loan hitting a new high. Its survey shows the 30-year loan averaged 4.03%. Interestingly, we are seeing something of a convergence with the 15-year fixed-rate mortgage and the five-year adjustable-rate mortgage. Bankrate.com's survey shows the 15-year loan averaging 3.26% and the five-year ARM averaging 3.18%. This makes sense when you consider any interest-rate moves by the Federal Reserve will hit the short-end of the yield curve first. But credit-market participants aren't waiting for the Fed. They've taken matters into their own hands. Interest rates across the board are up perceptibly over the past month. The 10-year U.S. Treasury note was recently yielding 2.37%, its highest yield since November. (The 10-year note is a reliable proxy for the direction of mortgage rates.) This seems counter-intuitive when you consider recent news on economic growth. Indeed, the final revision of gross domestic product (GDP) for the first quarter shows the economy actually contracted 0.7%. What's more, GDP growth isn't expected to have picked up much pace in the second quarter. Most estimates we've seen have GDP growing at less than 1% (on an annualized rate) for the second quarter. A sluggish economy surely gives the Fed reason to pause on raising interest rates. Some outside the United States would also like to see the Fed hold off on any rate increase. The International Monetary Fund (IMF) recommends the Fed hold off until the first half of 2016. Not that the IMF necessarily matters. Fed Chair Janet Yellen said she still expects to increase interest rates this year, but only if the economy meets her forecasts. We remain skeptical that it will. This is why we thought a June rate increase – forecast by many at the beginning of the year – was unlikely to occur. We wouldn't be surprised if the Fed made no move on interest rates until 2016 (as the IMF would like). Why, then, are interest rates in general and mortgage rates in particular rising? Markets are anticipatory animals. What's occurring in the moment doesn't influence decisions today. What the future is expected to bring is what gets people to act. Investors appear to be anticipating a pick up in inflation. Recent data show that consumer prices rose in the European Union economies. This was the first sign of European consumer-price inflation in six months. The news has prompted many investors to sell bonds worldwide. (Financial markets are intertwined. What happens in Germany now influences what happens here.) With that said, we see mortgage rates taking a breather. The 30-year fixed-rate mortgage bobbing about 4% seems reasonable to us. We base our outlook on current expectations for GDP growth, U.S. consumer-price inflation, and the unlikelihood the Fed will do anything with the federal funds rate until the end of summer. Then again, you never know for sure. As we frequently mention, the risk is in the waiting.

 

Economic Indicator	Release Date and Time	Consensus Estimate	Analysis
Mortgage Applications	Wed., June 10, 7:00 am, ET	None	Important. Moderating lending rates should lead to an uptick in mortgage activity.
Retail Sales (May)	Thurs., June 11, 8:30 am, ET	1.0% (Increase)	Moderately Important. Retail sales remain weak across the board, which is indicative of sluggish economic growth.
Import Prices (May)	Thurs., June 11, 8:30 am, ET	0.0%	Moderately Important. Imports continue to support a non-inflationary pricing environment.
Producer Price Index (May)	Fri., June 12, 8:30 am, ET	0.25% (Increase)	Moderately Important. Producer-level inflation remains dormant and will have no impact on interest rates.

 

Don't Fear Higher Mortgage Rates   Rising rates has taken some steam out of mortgage activity. Refinance activity dropped 12% last week. Purchase activity was down 3%. Activity is down over the past few weeks. (The good news is that mortgage credit availability continues to trend higher.) Borrowers are obviously put off by higher rates, but they'll adjust in short enough time. Expectations are key. If borrowers believe that lower rates are unlikely, they'll act today on today's rates. They'll also act if they believe rates are likely to rise. The problem is that many borrowers get anchored to the recent past. They saw 3.75% on the 30-year loan a few weeks ago. That means many think they'll 3.75% again. We might, but at this point we don't think so. Besides, 4% is still a very good rate. Ten years ago, the 30-year fixed-rate loan was being quoted over 6%. What's more, rising rates are frequently indicative of an improving economy. After all, the Fed said it won't move on raising rates until the data support it. Supporting data would include strong economic growth.

Article Courtesy of Patti Wilson, American Momentum Bank.

All Signs Point to a Strong Summer.

Keeping you updated on the market! For the week of June 1, 2015

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MARKET RECAP All Signs Point to a Strong Summer Though a holiday-shortened week, it was a solid week nonetheless. Home prices continue to march to higher ground. The S&P/Case-Shiller Home Price Index posted a very solid and slightly higher-than-expected 1.0 % gain in March. Higher prices were seen in all 20 of the markets Case-Shiller follows. Year over year, the Case-Shiller index is up 5%. New home sales also continue to move higher. Sales were up 6.8% to 517,000 units on an annualized rate in April. Supply rose slightly in the month, to 205,000 new homes, but supply relative to sales fell to 4.8 months from 5.1 month. The upside of low supply is that it will encourage builders to bring more homes to markets. We've seen this in recent months in the increase in starts. Rising prices will also encourage more building. The median price of a new home was up 4.1% to $297,300 for April. Year over year, the median price is up a strong 8.3%. The good news on new home sales was a welcomed balance to the disappointing news on existing home sales last week. That said, we expect existing home sales to gain traction through the summer months. The news on pending home sales supports our optimism. Up four-consecutive months, pending home sales jumped a much higher-than-expected 3.4% in April following an upward revised 1.2% gain in March. Pending home sales are up 14% year over year, and are far ahead of final sales of existing homes, which are up only 6.1%. The Pending Sales Index – at 112.4 – is as high as it has been since May 2006. We should see existing homes trend higher over the next few months. Mortgage rates also continued to move higher, but only by a couple basis points. That said, depending on what part of the country you reside, the highest rates of the year were prevalent this past week. The good news is that mortgage rates appear to have plateaued, and are showing little inclination to move higher.

 

Economic Indicator	Release Date and Time	Consensus Estimate	Analysis
Personal Income (April)	Mon., June 1, 8:30 am, ET	0.3% (Increase)	Important. Income growth remains anemic and is hurting the starter-home housing market.
Construction Spending (April)	Mon., June 1, 10:00 am ET	0.8% (Increase)	Important. Residential construction continues to drive overall construction spending. This bodes well for the housing outlook.
Mortgage Applications	Wed., June 3, 7:00 am, ET	None	Important. Purchase activity continues to point to sales growth in coming months.
Employment Situation (May)	Fri., June 5, 8:30 am, ET	Unemployment Rate: 5.4% Payrolls: 218,000 (Increase)	Very Important. Low wage growth will push any interest-rate increases further into the future.

 

Is It Time for Prices to Take a Respite? Following price trends has never been easier. A few years ago, there was only one source – Case-Shiller. Today, there are numerous sources you can tap to get an idea of what home prices are doing in your neck of the woods. Trulia, CoreLogic, and Zillow are to name just a few. To be sure, rising prices can be a good thing for homeowners. Once someone becomes a homeowner, he or she generally owns an asset that appreciates over time (with proper maintenance, of course). The homeowner’s net worth increases with home equity. The homeowner can tap the equity for money to invest elsewhere or for current consumption. It's a virtuous circle. That said, you need to get into a home before you can enjoy the benefits of home-ownership. That's becoming a problem in many markets, particularly for first-time buyers. Prices in many markets have exceeded pre-bubble highs. Wage growth, on the other hand, still lags. This obviously makes it difficult for first-time buyers. A healthy housing market needs a continual influx of first-time buyers. Unfortunately, they are in short supply these days. At this point, we'd like to see further moderation in home-price appreciation. In addition, we'd like to see further price moderation coupled with more construction in the starter market. The coupling of these two objectives would help ensure the housing market remains healthy for years to come. Article courtesy of Patti Wilson, American Momentum Bank.

A Very Positive Sign on the Housing Front

Keeping you updated on the market! For the week of May 25, 2015

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MARKET RECAP A Very Positive Sign on the Housing Front We have a slightly different take on the world than most market commentators. Most commentators focus on consumption as the driving force behind the market. We focus more on production. To be sure, everything that is produced is produced to be consumed itself or to be used to produce something for final consumption. But consumption is always preceded by production. You have to produce before you can consume. For this reason, we put a little more weight on housing starts – production – than most. We were encouraged to see that housing starts blew past most economists' estimates in April. Specifically, starts rose to 1.135 million on an annualized rate. This is the highest monthly rate of starts in many years. More good news is found when you dig deeper into the data. The important single-family segment posted at 733,000 starts, 16.7% higher than in March. Permits, which portend future starts, rose 3.7%. We expect to see starts maintain this elevated level through the summer months. Granted, the surge in starts was partly attributable to downtime in March due to lousy weather. That said, the surge is more than weather driven. There is legitimate rising demand for new homes. This is reflected in home builder sentiment, which continues to maintain a 50-or-higher reading. The latest survey shows builder sentiment posted at 54 in May. Anything above 50 is positive. This is another reason we expect starts to maintain these elevated levels. A new home sale precedes an existing home sale. Existing home sales were disappointing, but not egregiously so. Sales were down 3.3% to 5.04 million on an annualized rate in April. Limited supply remains the bugaboo, particularly in the starter market. Young people still find it difficult to grasp the bottom rung. We remain confident, though, that entrepreneurial activity will eventually rectify this problem.

 

Economic Indicator	Release Date and Time	Consensus Estimate	Analysis
New Home Sales (April)	Tues., May 26, 10:00 am ET	490,000 (Annualized)	Important. The pick up in starts points to stronger new home sales through the summer season.
Mortgage Applications	Wed., May 27, 7:00 am, ET	None	Important. Rising rates have taken some steam out of purchase activity, but activity should pick up when borrowers realize higher rates are the new normal.
Pending Home Sales Index (April)	Thurs., May 28, 10:00 am, ET	1.0% (Increase)	Important. The uptrend in contracts points to rising sales activity heading into summer.
Gross Domestic Product (1st Quarter 2015)	Fri., May 29, 8:30 am, ET	1.0% (Annualized Decrease)	Important. Contracting economic activity in the first quarter is one important reason the Fed will not move to raise interest rates.

 

Why the Fed Doesn't Really Matter at This Point Here we are in the waning days of May and it appears highly unlikely the Federal Reserve will move to raise the federal funds rate in June. At the beginning of the year, June was the month most everyone pointed to for the first increase in nearly 10 years. We were skeptical then, and we repeatedly stated our skepticism in subsequent months. Our skepticism was well founded. In the latest policy meeting minutes (from late April) officials said in the most explicit terms yet that they're unlikely to raise the fed funds rate in June. After watching the economy stumble through the winter, many at the meeting were doubtful the criteria for a rate increase would be met. The fed funds rate is supposed to have a cascade effect. Once it starts to rise, all other rates eventually rise too. But as we know, longer-term interest rates have been rising without prompting from the Fed. The yield on the 10-year U.S. Treasury note frequently posts above 2.25% these days. The rate on the 30-year fixed-rate mortgage loan is frequently quoted above 4%. We think investor sentiment has changed. Investors are no longer willing to buy bonds – Treasury bonds in particular – that offer a negative real yield (a yield that does not compensate for inflation). Though the yield on all bonds and notes in the U.S. is nominally positive, many fail to maintain purchasing power over time when inflation is factored in. Consider it this way: If you earn 1% on your savings and consumer price inflation is running at 2%. After a year, you're 1% in the hole. You've lost purchasing power. Investors have been willing to put up with negative real interest rates because the Fed was continually driving interest rates lower through quantitative easing. The Fed stopped quantitative easing in October (though it continues to reinvest the proceeds of maturing bonds into new bond purchases.) Investors know the Fed won't drive yields any lower. Last month, we warned that markets can change, and change in a hurry. That has certainly happened with the sharp rise in interest rates in general and mortgage rates in particular. Could we see 3.75% on the 30-year fixed-rate loan a month from now? Anything is possible, but what's possible isn't the same as what is probable. Article courtesy of Patti Wilson, American Momentum Bank.

A tough yet honest conversation with a seller

I recently went on a listing appointment where I needed to have a tough conversation with the prospective Seller's.  Their home is fairly new and is in a lovely sub-division.  The area has continued to show positive appreciation and substantial growth.

 

As I toured their absolutely lovely home and was given a spreadsheet of the many, many upgrades to the home, I knew that a tough conversation was looming.  Although the home was stunning, the amount of upgrades to the home were way more than they could ever hope to recover right now based on the market report for their neighborhood.  It is one of those sick feelings that you dread having.

 

The price per square foot Sold average in this particular neighborhood is about $100 s.f.  With their upgrade list which exceeded the actual purchase price of the home, they were hoping to see it listed at $135 s.f.  It pained me to see the love and care that they had put into this home but at this time the market could not bear at that price per s.f.

 

I explained to them that even if we listed the home at their desired price and received an offer, if it didn't appraise then they would be re-visiting the price at some point.  Even if a cash offer came in, most buyers are savvy and would still not desire to pay way over market value in any neighborhood.

 

I encouraged them to go ahead and have an appraisal done prior to listing the home.  Hopefully they will see the writing on the wall from a third party.

 

The lessons here are:

• Unless you plan to stay in your home forever, consider your upgrades before you do them as you may not get back what you put into them if you decide to sell.
• Know what the current market value is for your home.  If you put in upgrades that you feel bump your value up way over what the neighborhood can bear, understand that you most likely will not see this investment returned.
• Realize that situations do change in our lives and what we planned on doing may very well have to change quickly.  

Upgrades are a good thing but only if they are consistent with keeping your home valued with the current market rate.  Have a licensed agent who knows your area consult with you prior to putting in some hefty upgrades.  You may decide to re-think some of them.

Having a tough conversation with a Seller is necessary when you are being honest, know the market and don't want to leave them with false hope.  The conversation is necessary and hopefully the homeowners will take the time to get an appraisal and then to re-think if they even desire to sell.  

Study: Owners still overestimate their home’s value

 

DETROIT – April 14, 2015 – Appraiser opinions of values were higher than homeowner estimates in 17 of the 27 metro areas (63 percent) measured by Detroit-based Quicken Loans.
Even though a majority of metros have higher appraisals than homeowners' estimates, however, the overall average finds owners continue to think their property is worth a bit more than an appraiser's estimate.
Home Price Perception Index (HPPI)
Nationally, appraiser opinions were lower than homeowner estimates by 0.40 percent in March. In February, appraiser opinions were only 0.13 percent lower than homeowner estimates.
This slight change in the national HPPI was consistent with most metro areas examined, nearly all of which saw little perception change from the month prior. Seventeen of the 27 metro areas analyzed are still seeing appraiser opinions higher than homeowner estimates.
Although the difference is minor, Tampa, Florida's HPPI value turned negative in March, meaning, on average, appraiser opinions are now greater than homeowner estimates.
"While the national HPPI shows appraiser opinions trailing those of homeowners, it is encouraging to see the gap at such a narrow margin," says Quicken Loans Chief Economist Bob Walters.However, "homeowners in a majority of the nation's largest markets can take solace in the fact that their home may have more equity than they realize."
For charts and background information on the HPPI, visit Quicken's website.
© 2015 Florida Realtors®  

Does This Feel Like a Recovery?

Keeping you updated on the market! For the week of February 9, 2015

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MARKET RECAP Does This Feel Like a Recovery? Over the past month, we've spent an inordinate amount of time on the Federal Reserve. We think for good reason. Most everyone in financial circles is openly wondering when the Fed will raise the influential federal funds rate. In other words, all of us are wondering when interest rates will rise. When interest rates rise, financing obviously becomes more expensive. But rising interest rates are also indicative of a stronger economy. The Fed raises rates because it believes businesses can withstand higher financing costs. Yet here we are five years after the nadir of the 2008-2009 recession and interest rates continue to hold post-recession lows. By now, you would think they would have moved higher. After all, the Fed initially pointed to a 6.5% unemployment rate as a guidepost to begin raising rates. We long ago blasted past 6.5%. Unemployment is down to 5.6%. There are a few mitigating factors at work. U.S. interest rates are generally higher than those in Europe and Japan. At the same time, the dollar has appreciated strongly against most currencies. Raising interest rates would further strengthen the dollar. A stronger dollar, in turn, makes U.S. exports more expensive (though imports and foreign travel are cheaper). What's more, It's possible the economy simply isn't as strong as the numbers suggest. Consumer-price inflation remains muted and below the Fed's 2% annual growth target. When the economy heats up, so does consumer spending, and so does consumer-price inflation. That hasn't occurred. Housing, in particular, doesn't feel as strong as we'd expect it to feel this deep into a recovery. Last week, we mentioned that we see a split in the housing market (at least nationally). New homes sales continue to move forward, but existing home sales continue to lag. Unfortunately, it doesn't appear existing homes sales will move meaningfully forward any time soon. The latest reading on pending home sales points to at least another month or two of sluggish sales growth. We've seen a resurgence in mortgage refinancing activity, which is good. That said, we'd like to see more purchase activity. Of course, more purchase activity is indicative of more home sales – both new and existing. The good news is that the reduction in MIP fees on FHA loans is lifting FHA demand. Conventional demand, on the other hand, remains flat, but it's worth mentioning that underwriting standards have become more accommodating over the past 12 months. Don't misunderstand. We're still up for housing (as we'll explain in further detail below), but it just feels like housing should be up more than it is.

 

Economic Indicator	Release Date and Time	Consensus Estimate	Analysis
Mortgage Applications	Wed., Feb. 11, 7:00 am, ET	None	Important. Refinances have taken the lead. Purchases have again backslid, which points to muted near-term sales growth.
Retail Sales (January)	Thurs., Feb. 12, 8:30 am, ET	0.7% (Decrease)	Moderately Important. A fall off in retail sales is a normal consumer reaction to the holiday spending binge.
Import Prices (January)	Fri., Feb. 13, 8:30 am, ET	3.5% (Decrease)	Moderately Important. Falling import prices ensure inflation risk remains nonexistent.
Consumer Sentiment (February)	Fri., Feb. 13, 9:55 am, ET	98 Index	Moderately Important. Consumer sentiment remains high, but has yet to lift demand for big-ticket items.

 

Full Steam Ahead Though it might not feel like a full-blown recovery now, it should feel like one by the end of the year. Heading into this year, we presented our case for why we thought housing would breakout in 2015. A couple high-profile financial institutions have stepped forward this week to support our contention. Goldman Sachs recently reached out to its clients to inform them that housing looks strong. Goldman sited a pick up in housing formation, which has lagged in recent years, for its bullish outlook. With improving job prospects, more millennials will move of their parent's home, so Goldman reasons. At the same time, access to easier credit will enable them to buy their own home. There is still a dearth of first-time buyers in this market and Goldman expects millennials to fill the void. Fannie Mae is also aboard the housing bandwagon. Like Goldman, Fannie points to a millennial uplift. What's more, Fannie is counting on new construction to meet rising demand from millennials and other buyers. Fannie expects starts to average 1.15 millions units on an annualized basis this year. It expects that number to ramp up to 1.5 million to 1.6 million units per year by 2017. From our perspective, the high number of renters in this market is pent up buyer demand. Since the end of 2007, the number of homes occupied by renters is estimated to have increased by four million. We already know that homeownership is at a multi-decade low. We also know renting is frequently the gateway to buying. Once someone has lived on his own, he frequently wants to buy a place of his own. So, yes, we remain up for housing. We just think we'll feel a little more up by year's end. Article Courtesy of Patti Wilson, American Momentum Bank.

ECB Embraces QE: Why We Should Care

Keeping you updated on the market! For the week of January 26, 2015

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MARKET RECAP ECB Embraces QE: Why We Should Care It's probably best to begin by defining acronyms. The ECB is the European Central Bank, the European Union's (EU) equivalent to our Federal Reserve. QE refers to quantitative easing. QE is something our Fed commenced in 2008 and ended late last year. QE, of course, refers to a central bank buying bonds and other assets, which it pays for with new money, thus injecting new money into the economy. The end result of QE, as we know from experience, is lower interest rates, including lower mortgage rates. From 2008 to 2013, the rate on the 30-year loan dropped three percentage points to 3.5%. The 30-year loan isn't quite that low today, but it's close: Bankrate.com has the 30-year loan averaging 3.81%; Freddie Mac has it averaging 3.63%. Will mortgage rates hold current levels? Many economists believe the Fed will begin to raise the federal funds rate in the second half of 2015. Raising the fed funds rate raises lending costs to banks. Interest rates, therefore, are prone to rise. In the past, this is how it all played out. But today isn't like the past. QE is a relatively new phenomenon. It was new when the Fed undertook it in 2008. It is new when the ECB undertakes it this March. European QE is expected to run through September 2016. By then, the ECB is expected to have injected another 1.1 trillion euros into Eurozone economies. How far European interest rates will fall is anyone's guess. As it is now, interest rates in Germany, Europe's economic powerhouse, are already very low. A 10-year German bond yields roughly 45 basis points. The U.S. Treasury equivalent yields roughly 1.8% – more than four times the German bond. So what does this mean to us? We think that we'll see continued strong demand for U.S. Treasury and mortgage agency debt. Relative to European government debt, U.S. Treasury debt looks attractive. We're already seeing strong demand for U.S. dollars. A year ago, it took $1.36 to buy one euro. Today, it takes $1.14. We expect that many of these dollars will flow into U.S. financial assets, including long-term U.S. debt. The ECB's QE should help hold U.S. interest rates down, all things constant. But we have to offer a caveat: all things aren't constant. Mortgage demand is again on the rise. The MBA reports that applications increased 14.2% last week. The MBA's refinance index was up was up 22%, the purchase index was up 3%. Over the past year, we've seen underwriting standards on conventional loans ease. As for government loans, HUD's 50-basis-point reduction of PMI premiums on FHA loans have helped lift demand. If demand continues to rise, it's possible mortgage rates could rise to take advantage of rising demand. That said, we expect today's low interest rates to hold through the first quarter of 2015. But as it is with interest rates, there are no guarantees. So we see little upside to procrastinating.

 

Economic Indicator	Release Date and Time	Consensus Estimate	Analysis
New Home Sales (December)	Tues., Jan. 27, 10:00 am, ET	448,000 (Annualized)	Important. Sales should trend higher on rising construction and strong job growth.
Mortgage Applications	Wed., Jan. 28, 7:00 am, ET	None	Important. Sustained low rates should raise demand for mortgage financing.
Pending Home Sales Index (December)	Thurs., Jan. 29, 10:00 am, ET	0.5% (Increase)	Important. Sales look poised to move higher on rising home-purchase affordability.
Gross Domestic Product (4th Quarter 2014)	Fri., Jan. 30, 8:30 am, ET	3% (Annualized Increase)	Important. The U.S. will continue to have the strongest economic growth among Western developed countries.

 

Still Up for New Housing Home builders were slightly less optimistic in January compared to the previous month. The NAHB/Wells Fargo Housing Index dipped to 57 from 58 in December. Fifty is key, though. A reading above 50 means builders view the outlook favorably. The good news is sentiment has consistently held above 50 for the past 12 months. We're not surprised confidence remains elevated. Housing starts increased 4.4% to 1.089 million units on an annualized basis in December. Single-family housing starts were particularly strong, rising 7.2% to 728,000 units on an annualized basis. History leads us to believe that starts should continue to trend higher. Housing starts and completions had an outlier surge after the bursting of the tech bubble in 2000. The surge continued to 2007. As we know, single-family starts and completions then fell off a cliff and bottomed in 2011. Activity remains below the historical annual average of around one million single-family starts. In other words, we have plenty of room to run. Factor in basic economics, and there is even more reason to be optimistic. A dearth of new supply coupled with increased demand and inexpensive financing options points to a very good year for new home sales. Article Courtesy of Patti Wilson, American Momentum Bank.