Mortgage Loan Rates Mixed, Applications Dipped Slightly Last Week

The Mortgage Bankers Association (MBA) released its weekly report on mortgage applications Wednesday morning, noting a dip of 0.2% in the group’s seasonally adjusted composite index for the week ending July 20. Mortgage loan rate movements were mixed last week.

Mortgage loan rates did not move much last week, with the 30-year fixed rate loan ending the week about one tick above where it began, at 4.65% according to Mortgage News Daily. The yield on 10-year Treasury bonds closed the week at around 2.82% on Tuesday, down four basis points week over week.

On an unadjusted basis, the MBA’s composite index was unchanged week over week. The seasonally adjusted purchase index decreased by 1% compared with the week ended July 13. The unadjusted purchase index decreased by 1% for the week and was 2% higher year over year.

The MBA’s refinance index increased by 1% week over week and the percentage of all new applications that were seeking refinancing rose from 36.5% to 36.8%.

Adjustable rate mortgage loans accounted for 6.3% of all applications, up from 6.1% in the prior week.

According to the MBA, last week’s average mortgage loan rate for a conforming 30-year fixed-rate mortgage remained unchanged at 4.77%. The rate for a jumbo 30-year fixed-rate mortgage rose from 4.66% to 4.72%. The average interest rate for a 15-year fixed-rate mortgage ticked up from 4.22% to 4.23%.

The contract interest rate for a 5/1 adjustable rate mortgage loan decreased from 4.12% to 4.09%. Rates on a 30-year FHA-backed fixed rate loan were unchanged at 4.78%.

source: https://247wallst.com

Booms Are Back In These 25 Real Estate Markets

Denver, Colorado. (Shutterstock)

Many investors like real estate because of the potential for steady, above-average returns with only a limited downside risk. Others, however, are more intrigued by the possibility of a quick strike in a real-estate boom, holding a property for a short time as values rise and magnifying their return with leverage from a mortgage or other low-cost loan.

Boom markets don’t come along very often in real estate. There haven’t been any since the big crash of 2008, and before that, they were usually limited to one or two places at a time, like Houston in the mid-1980s, New York later that decade or Southern California in the early 1990s.

But booms are back, with some already well under way and a good number in the early stages. Home building lagged almost everywhere in the last decade while strong economic growth has pumped up demand for housing in many local markets, creating the imbalance that drives a boom.

The 25 markets listed below are mainly in the early stages of a boom, even though home prices have already been rising at a brisk pace. Denver is the exception, with prices already into boom territory.

www.LocalMarketMonitor.comLOCAL MARKET MONITOR

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At Local Market Monitor, we identify potential boom markets by calculating how much the current average home price is above the local “income price.” When that margin is greater than 15%, a boom is possible. You can see that our calculations range from 16% for Asheville and Sacramento to 47% for Denver. This is a metric we have been monitoring for over 25 years, and it has proved to be extremely reliable at identifying booms and busts in advance.

The importance of identifying a boom market is that home prices in a boom take on a life of their own, increasing at a high rate for several years, with jumps of 10-15% a year quite likely. Obviously, if you invest at the early stage of a boom, you can expect a big increase in value in just a few years.

The markets in our list have three characteristics that support a run-up in prices during the next few years.

  • They’re already over-priced compared with the income price (no longer “recovering”).
  • The average home price increased at least 8% last year.
  • And with the exception of West Palm Beach, the local economy has been strong, in many cases adding jobs well above the 1.6% national rate.

What kind of investment can you make in these markets? It’s got to be one you can quickly exit in a few years. Single-family is always easiest, and if you’ll be renting out, stick with short leases. Rehab for immediate resale is a good strategy, maybe staging several properties at once. Apartment buildings or existing rentals are lesser choices because they probably won’t have the same appreciation.

Miami, Florida. (Shutterstock)

Note that the Price/Rent ratio is well above 20 in most of these markets, which means that fewer renters are able to pay what you would normally want. You’re really just renting the property for extra return, not the main reward, so don’t hold out for top rental dollar because you may not get it.

Now let’s talk about risk. We identify boom markets for their investment potential but also to identify where the risk of investing is higher than normal. Boom markets are risky markets. The more home prices move above the income price, the riskier a market gets. Denver is already a riskier market than Asheville. In the boom that preceded the 2008 crash, prices in some markets were more than 60% higher than the income price — and subsequently fell by that amount and more. You don’t want to be holding a property past the peak of a boom.

Local Market Monitor also forecasts home prices. We forecast that prices will rise briskly in all 25 of these markets over the next three years. But the risk for investors increases in boom markets along with the prices.

What can end a boom? In Houston back in the 1980s, it was a drop in oil prices. In 2008, it was sub-prime mortgages. These days it could be a trade war, an economic crisis, a political crisis, a real war.

How to protect yourself: If home price increases drop off — from 9% a year to 5%, let’s say — sell. If you wait for the peak, you’ll find few buyers, maybe none.

And maybe you shouldn’t even wait that long — it takes time to sell a property. Maybe just set a reasonable appreciation goal and sell when the market hits that.

source: https://www.forbes.com/

Housing market remains strong, despite mortgage rate worries

he Federal Reserve is raising interest rates, and that’s led some to worry that mortgage rates will spike and put an end to the housing boom in the United States.

Not so fast, according to the head of a big homebuilder.

Stuart Miller, executive chairman of Miami-based builder Lennar, said Tuesday that “concerns about rising interest rates and construction costs have been offset by low unemployment and increasing wages.”

He added that there is still a “short supply” of houses on the market after “years of underproduction of new homes.” And he said “demand remained strong” and “affordability remained consistent” thanks to rates that remain relatively low.

Miller made those remarks in Lennar’s earnings release Tuesday morning. The company reported revenue and profits that topped Wall Street’s forecasts.

Shares of Lennar (LEN) surged more than 7% on the news. Rival builders Pulte (PHM), DR Horton (DHI), Toll Brothers (TOL) and KB Home (KBH) all rose too.

Lennar’s results are an encouraging sign for the group, which has been hit hard this year on fears that higher interest rates will start to take a bite out of demand for new homes.

Builder stocks have been hit hard this year, with many of them — including Lennar — falling more than 20% in 2018.

But Lennar’s results and other recent data may be assuaging fears that the bottom is going to fall out of the housing market.

The federal government said Monday that new home sales in May were better than expected, citing particular strength in the southern part of the US.

That should be good news for the broader economy.

Lewis Alexander, chief US economist at Nomura, said in a report Tuesday that he was raising his GDP estimate for the second quarter, citing the stronger home sales figures and expectations of higher broker commissions.

And according to the closely watched S&P Case-Shiller index that was released Tuesday morning, home prices continued to rise across the country — with 17 of the 20 cities tracked in the index registering increases.

“Given the combination of strong demand and lean inventories, especially for existing homes, we expect home prices to continue appreciating at a modest pace for the remainder of the year,” said Barclays economist Pooja Sriram in a report Tuesday.

As long as the housing market remains stable, that should give consumers more confidence. To that end, the government reported strong retail sales figures for May earlier this month.

And it was led by healthy gains at home-improvement stores like Home Depot (HD) and Lowe’s(LOW). These chains tend to do well when people are looking to sell their home.

source: http://money.cnn.com/2018/06/26/investing/lennar-housing-market-home-building/index.html

for more real estate information and training, visit our website at http://rdtrainingsystems.com.

 

7 benefits of a Federal Reserve interest rate hike

Federal Reserve Chairman Jerome Powell speaks at a news conference following the Federal Open Market Committee meetings in Washington, U.S., March 21, 2018.

Interest rates are going up. The Federal Reserve hiked rates once already this year in March. And at its meeting this Tuesday and Wednesday, the Fed is likely to raise the federal funds rate again. Many experts predict there will be a third rate hike before the end of the year.

Sure, the increases mean it will cost more to borrow. But you’ll benefit from getting better rates on high-yield certificates of deposit.

Healthier returns on CDs are only one gain from the Fed’s rate-raising campaign. Here’s how you can take advantage of other positive outcomes from Fed rate increases.

Get expert advice and tools to help you make better financial decisions. Sign up for the Bankrate newsletter today.

1. Higher returns for savers

If you’re a saver, low interest rates have brought about the financial equivalent of a long drought. Any improvement, even modest, is welcome and overdue.

“Rising interest rates would benefit elderly Americans on fixed incomes and others who rely on interest income to help cover their living expenses,” says Alan MacEachin, corporate economist with Navy Federal Credit Union.

2. Tamed inflation

Most broad-based measures of prices indicate inflation has continued to remain under control in the U.S. in recent years. The central bank’s target for inflation is 2 percent, but inflation has yet to hit the bull’s-eye on a sustained basis, as measured by personal consumption expenditures, or PCE.

If the Fed achieves its objectives in steering the economy, inflation should remain under control.

A positive inflation scenario after a rate increase might include “lower prices of imported consumer goods, due to a likely higher exchange value of the dollar if our domestic rate increases are not matched by policy tightening in other major economies,” says Daniil Manaenkov, U.S. forecasting specialist at the Research Seminar in Quantitative Economics at the University of Michigan.

3. More lending

A credit bubble rightfully received some of the blame for the financial crisis in 2007. In the aftermath, lending came to a complete stop.

Lending has resumed. “Banks may have a greater incentive to loan out reserves at higher interest rates, and the increased flow of additional credit would boost economic growth,” says Sean Snaith, director of the Institute for Economic Competitiveness at the University of Central Florida.

4. More interest income for retirees

As a rate boost brings better returns to savings vehicles, senior citizens should enjoy better paydays by putting their money in CDs and savings accounts. “Higher interest rates on CDs and other financial instruments will particularly help older Americans trying to live on their retirement savings,” says Lynn Reaser, chief economist at Point Loma Nazarene University in San Diego.

As the population ages in coming years, many more Americans will come to appreciate even modest increases in interest income during retirement when they buy certificates of deposit.

5. Stronger dollar to boost purchasing power

As the Fed continues to boost rates (and with the outlook for more rate hikes to come), the U.S. dollar gets more support. Ultimately, that means more purchasing power with the greenback compared with other currencies.

Predicting moves in the foreign exchange market is difficult, but Snaith and other economists say the dollar could strengthen further as the Fed boosts rates.

Fed tightening “is likely to mean a somewhat higher dollar, so people traveling to Europe will do well,” says Dean Baker, co-director of the Center for Economic and Policy Research in Washington.

6. Stocks will trade on fundamentals

As the Federal Reserve embarks on what officials have called “normalization” (that is, a backing away from record-low rates), stock prices may start to make more sense and not reflect the central bank’s easy monetary policy quite so much.

“A normalization of rates would return the focus to market fundamentals and off of focusing on the nuances of each Fed statement,” says David Nice, former senior economist at DS Economics in Chicago.

7. Would-be homebuyers may get off the fence

As the Fed continues to raise rates, higher mortgage rates likely will follow. If the prospect of higher mortgage rates compels you to a home sooner than later, you won’t be alone.

“Higher mortgage rates could push buyers off the fence — increasing demand, increasing prices and increasing home equity so that more people can sell their homes,” says Joel Naroff, president of Naroff Economic Advisors in Holland, Pennsylvania.

source: https://www.cnbc.com/2018/06/11/7-benefits-of-a-federal-reserve-interest-rate-hike.html

The Housing Crisis Is Officially Over

happy family mother and daughter playing at home in a tent.
The financial crisis was a decade ago, and many Americans have recovered. At the peak of the economic downturn, more than 30 percent of American homeowners owed lenders more than the value of their homes. Now, that number has finally dropped to under 10 percent.

However, millions are still reeling from aftershocks of the housing crisis: Nearly 4.5 million homeowners are underwater on their mortgages, according to a new report from Zillow.

Click to read more about which states are still being hit hard by the foreclosure crisis.

In the late 2000s, the housing bubble burst sent home values into a freefall, with the typical U.S. home losing more than a quarter of its value when the market crashed, sending millions of homeowners into negative equity.

Know: 19 Reasons Your Mortgage Loan Could Get Rejected

The situation is improving, but the outlook can appear bleak for Americans with underwater mortgages. Relief can be found with some options that exist for homeowners to avoid foreclosure:

  • Stay and pay: Don’t continue to throw money at a bad investment, but if the sense of obligation pulls you, you can continue to pay your mortgage bill month after month in the hope that your situation improves.
  • Consider a short sale: The goal is to get out of your home quickly and for the bank to forgive remaining debt. Homeowners should be prepared to sell their houses for a lower price than they paid for it.
  • Walk away: Only pull this strategic default card if you’re prepared for the consequences of a drop in credit score, a credit report blemish and guaranteed difficulty in securing a future loan.
  • Refinance your home: A lower interest rate and lower monthly payment through refinancing your mortgage might give you the relief you need in the short and long term.
  • Get a deed in lieu of foreclosure: This allows you to give the house to the lender and avoid foreclosure proceedings altogether. Chief among the benefits is that you are immediately released from most or all indebtedness associated with the defaulted loan and your credit suffers less.
  • Get a reverse mortgage: Available to individuals ages 62 and older, eligible homeowners can access a portion of their home equity by borrowing against it. Seniors can take the money in a lump sum, receive monthly payments, draw on it like a line of credit or use any combination of the three. The homeowner’s obligation to repay the loan is deferred until the homeowner dies or the home is sold.
  • Home loan modification: With a loan modification, lenders lower the interest rate and payment, either temporarily or permanently. It is also fairly common for lenders to extend the term of the loan or to allow borrowers to make up missed payments by tacking them on to the end of the loan or spreading them out over the remaining loan.

Read: Pros and Cons of Getting a Deed in Lieu of Foreclosure

The best option to avoid foreclosure is to stay ahead of your bills, if possible. Research government mortgage assistance agencies like Home Affordable Refinance Program (HARP), Hardest Hit Fund (HHF) and Department of Housing and Urban Development (HUD) for free guidance on how to prevent a foreclosure.

source: https://finance.yahoo.com/news/housing-crisis-officially-over-182836139.html

for more information visit our website http://rdtrainingsystems.com

U.S. Home Values Are Rising at Their Fastest Pace in 12 Years

National home values have increased 8.7 percent since last April to a median value of $215,600, according to Zillow.

The rise in home prices has allowed more people to take cash-out of the homes when they refinance. Refinancing, where the home owner took additional cash out, rose to 61 percent in the first quarter — the highest rate seen since the third quarter of 2008, according to FHFA data.

The pace of appreciation seen by Zillow is the fastest since June 2006, when home values were rising nine percent annually.

San Jose home values appreciated 26 percent year-over-year. Las Vegas, Seattle, Dallas-Fort Worth, San Francisco, Tampa, Atlanta, Charlotte and Orlando all saw double digit a growth.

“The spring home shopping season has been a perfect storm of strong demand and tight supply,” said Zillow senior economist Aaron Terrazas. “Sluggish new construction has exacerbated the supply situation and homes that are hitting the market, are moving very quickly once they do. Americans are also in a spending mood, boosted by recent tax cuts and rising wages.”

In 21 of the 35 largest housing markets, home values have surpassed levels reached during the height of the housing boom over a decade ago.

source: https://www.bloomberg.com/news/articles/2018-05-24/u-s-home-values-are-rising-at-their-fastest-pace-in-12-years?utm_source=yahoo&utm_medium=bd&utm_campaign=headline&cmpId=yhoo.headline&yptr=yahoo

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US sales of new homes slipped 1.5 percent in April

US sales of new homes slipped 1.5 percent in April

FILE- This May 4, 2018, file photo shows a house is under construction in Roseville, Calif. On Wednesday, May 23, the Commerce Department reports on sales of new homes in April. (AP Photo/Rich Pedroncelli, File)

WASHINGTON (AP) — Sales of new U.S. homes fell 1.5 percent in April, held down by a shortage of affordable houses in the most desirable areas and sharp pullback in purchases in the western United States.

The Commerce Department said Wednesday that new homes sold last month at a seasonally adjusted annual rate of 662,000. Despite the setback, new-home sales so far this year are 8.4 percent higher than in 2017.

A solid job market and a shortage of existing homes for sale have led more people into the new home market, even though they are generally more expensive than existing homes. Sales last month occurred disproportionately at the higher end, where profit margins are often greater for builders.

Momentum in the U.S. housing market has overcome even a supply shortage because mortgage rates remain near historic lows. But average mortgage rates have been climbing in tandem with higher rates throughout the economy, reaching a seven-year high of 4.61 percent on a 30-year loan, according to mortgage buyer Freddie Mac.

In April, new-home sales tumbled 7.9 percent in the West and were essentially unchanged in the Midwest and South. Sales improved 11.1 percent in the Northeast. The new-home sales figures are often volatile on a monthly basis and are often revised.

The median sales price of a new home rose 0.4 percent from a year ago, to $312,400. But that masks a broader change last month, which was more sales at luxury prices levels.

Ten percent of new homes purchased in April cost more than $750,000 — twice the percentage of homes bought last year in that range. As a result, the average price of a new home in April shot up 11.3 percent from a year ago, to $407,300.

source: https://finance.yahoo.com/news/us-sales-homes-slipped-1-140457520.html

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Homeowners are bullish on prices, while buyers may find there’s no inventory

Rows of houses in Las Vegas.

Jacob Kepler | Bloomberg | Getty Images
Rows of houses in Las Vegas.

Americans are bracing for houses to get costlier.

In a recent survey, 64 percent said they’re anticipating an increase in property values during the next year, according to findings from Gallup. (Click on graphic to enlarge.)

That’s the highest share since the housing bubble in the mid-2000s, when 70 percent were predicting price levels to soar.

Optimism levels vary depending on which pocket of the country you find yourself. Nearly 80 percent of Americans in the West forecast a pricier real estate market in the next year, compared with 64 percent in the South, 58 percent in the East and 56 percent in the Midwest.

The biggest takeaway? “People are very positive about the housing market,” said Frank Newport, editor-in-chief at Gallup.

How to use your home as a source of cash

How to use your home as a source of cash  

Despite rising prices, Americans want in.

To that point, 45 percent of non-homeowners say they plan to buy a house in the next five years. However, just 22 percent of homeowners in that same time period anticipate selling. Such an imbalance between supply and demand could explain in part why property values are on the rise, Newport said.

Of course, while rising home prices are great if you’re a homeowner looking to sell, that trend isn’t fabulous if you’re in the market. Accumulating enough for a down payment becomes that much more of a stretch.

For example, the growth of student loan debt already poses a major barrier to homeownership for many Americans. More than 80 percent of people ages 22 to 35 with student debt who haven’t bought a house yet blame their educational loans, according to the National Association of Realtors.

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Regardless, two-thirds of Americans still believe right now is a good time to buy a house, Gallup found.

“The more cynical investor swoops in and buys when prices are at the bottom,” Newport said. “But Americans are not cynical investors.”

Gallup conducted telephone interviews between April 2 and 11, with a random sample of 1,015 adults age 18 and older. The results have a margin of error of plus or minus 4 percentage points.

More from Personal Finance:
These are the ways student loans stop people from buying a house
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WATCH: How to win a bidding war when buying a home

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source: https://www.cnbc.com/2018/05/08/more-americans-expect-home-prices-to-rise-over-the-next-year.html?__source=yahoo%7Cfinance%7Cheadline%7Cstory%7C&par=yahoo&yptr=yahoo

US sales of new homes shot up 4 percent in March

Sales of new U.S. homes jumped 4 percent in March, propelled by a surge of buying in the West.

The Commerce Department said Tuesday that sales last month were at a seasonally adjusted annual rate of 694,000. The two prior months had their sales revised upward with the annual rate being 667,000 in February and 644,000 in January. For the first three months of 2018, sales are running 10.3 percent higher than a year ago.

Homebuyers are snapping up newly built houses as the economic outlook has continued to improve in recent months. Nor have the gains been derailed so far by 30-year mortgage rates climbing to their highest averages since early 2014.

Still, the solid sales growth for new homes also shows that many would-be buyers can’t find existing homes that are available to purchase. Listings for existing homes sank to the lowest levels on record for March, the National Association of Realtors reported on Monday.

New homes tend to cost more than older properties. The median sales price of a new home rose 4.8 percent from a year ago to $337,200, a nearly $87,000 premium on the median cost of an existing home.

Prices for a new home are increasingly concentrated at higher price points. In 2016, 53 percent of new homes cost more than $300,000. That figure climbed to 60 percent for new homes sold in March.

The March increase was driven almost entirely by a 28.3 percent leap in sales in the West. New-home purchases rose slightly in the South, fell in the Midwest and plunged in the Northeast. The new home sales report can be volatile on a monthly basis, causing the numbers to be revised later.

source: http://www.foxnews.com/us/2018/04/24/us-sales-new-homes-shot-up-4-percent-in-march.html

Freshen up your home for spring with these 7 steps

Whether it’s obvious by the weather, spring has sprung. As temperatures thaw, it’s also the perfect time to tackle those home improvement projects you’ve been putting off.

Lacking direction or don’t know where to start? These seven steps will help start your spring with a fresher home inside and out.

1. Install new house numbers  

Though they’re a small detail, house numbers can increase your home’s charm. A prime first impression for new visitors, your house numbers will be the first thing guests seek out when navigating to your address. So keep them fresh to boost your house’s curb appeal.

2. Paint your front door

Residential Front Door Of A Georgian House In Dublin

The front door can be your home’s most prominent first impression.  (iStock)

For those who glaze right over the house numbers, your front door will be a more prominent first impression. The centerpiece to your home, your front door can set the tone for the entire house. Bold colors are all the rage now. But regardless of the color, adding a layer of paint will make your whole home look freshened up. Learn how to paint your door here.

3. Deep clean

Shot of a handsome mature man and his daughter mopping the floors in their home as part of their spring cleaning

To get the deepest clean, follow steps like dishwashing vent covers, hosing down area rugs and using lots of baking soda.  (iStock)

You never realize how dirty something was until you see it clean. Deep cleaning your home can make your walls, floors and décor look brand new. To get the deepest clean possible, follow these steps from homehacks, like dishwashing vent covers, hosing down area rugs and using baking soda in more places than you ever thought you could.

4. Make the backyard your favorite escape

Quick fixes like oversized plants, DIY seating, an outdoor bar and a cohesive theme will transform your backyard from an extra grassy space to the perfect spot for both solitude and entertaining. These ideas from Lonny might spark your creativity.

5. Build a plant wall

Botanical living room with grey sofa, green pillows and bookcase

Give your home a wall of succulent boxes, framed moss or contemporary plant stands to usher in spring.  (iStock)

A vertical garden not only looks clean and modern, but also ups the air quality in your home. Whether you install succulent boxes, mount some framed moss or hang contemporary plant stands, the extra greenery will make your home instantly look alive and ready to usher in the season.

6. Paint ugly countertops

Can’t stand the look of laminate countertops? Before you shell out thousands of dollars for new ones, try a quick fix that will hold you over for a few years. With these step-by-step instructions, you can transform your laminate to look like woodstone or even granite.

7. Update hardware

Close up image depicting an antique oak cabinet with many drawers and many unique knobs of different colors and patterns. Room for copy space. Image taken on mobile device.

For a creative twist, try installing a statement knob or handle on a select cabinet door.  (iStock)

New kitchen and bathroom knobs are the easiest facelift a home can get. Spring offers the perfect chance to finally fix mismatched kitchen metals or update dated and worn-out handles and doorknobs. For a creative twist, try installing a statement knob or handle on a select cabinet or door.