Home Price Gains are Accelerating Again

Home price gains continued to heat up in November, with Phoenix, Charlotte and Tampa leading the way, S&P Case-Shiller index says

KEY POINTS
  • Nationally, prices increased 3.5% annually in November, up from 3.2% in October, according to the S&P CoreLogic Case-Shiller National Home Price Index.
  • The 10-City Composite increased 2.0% annually, up from 1.7% in the previous month. The 20-City Composite rose 2.6% annually, up from 2.2% in October.
  • Prices are hottest in Phoenix, Charlotte, North Carolina, and Tampa, Florida.

After cooling for much of last year, home price gains are accelerating again.

Nationally, prices increased 3.5% annually in November, up from 3.2% in October, according to the S&P CoreLogic Case-Shiller National Home Price Index.

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The 10-City Composite increased 2.0% annually, up from 1.7% in the previous month. The 20-City Composite rose 2.6% annually, up from 2.2% in October.

Prices are hottest in Phoenix, Charlotte, North Carolina, and Tampa, Florida. Phoenix home prices were up 5.9% year over year in November. In Charlotte, they rose 5.2%, and in Tampa home prices increased 5.0%. Fifteen of the 20 cities reported larger price increases in the year ended in November 2019 compared with the year ended in October 2019.

“With the month’s 3.5% increase in the national composite index, home prices are currently 59% above the trough reached in February 2012, and 15% above their pre-financial crisis peak,” said Craig J. Lazzara, managing director and global head of Index Investment Strategy at S&P Dow Jones Indices. “November’s results were broad-based, with gains in every city in our 20-city composite.”

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Lower mortgage rates may be fueling home prices, as buyers gain purchasing power when rates fall. Mortgage rates were about a full percentage point lower in November 2019 than they were in November 2018.

A more powerful driver of prices, though, is the severe shortage of homes for sale. Inventories have dropped to near record lows, especially at the entry level of the market. Strong demand and tight supply only push prices higher. Inventories had been rising at the beginning of last year, causing prices to cool.

“It is, of course, still too soon to say whether this marks an end to the deceleration or is merely a pause in the longer-term trend,” added Lazzara.

*The Annual Percentage Rate 2.982% is based on a single family owner occupied home loan with a maximum loan amount of $510,400 a  2.75% interest rate, 1.50 points, 30 day rate lock, Fixed Rate for 15 Years with a payment of $3,463.69, a 80% Loan to Value and a minimum credit score of 740. The  rates and annual percentage rate (APR) will vary depending upon the actual down payment percentages, points and fees for your transaction. The rates may change or not be available at commitment or closing or may be subject to product restrictions. Rates advertised are as of January 9, 2020.  Rates are subject to change without notice. 178 Trinity Pass, Pound Ridge NY 10576 * Registered Mortgage Broker, NYS Banking Department. Loans Arranged Through Third Party Providers . NMLS# 1375 & 42481

Source: CNBC

US Housing Starts Soar 16.9% in December to a 13-year High

KEY POINTS
  • U.S. homebuilding surged to a 13-year high in December as activity increased across the board.
  • The data suggested the housing market recovery was back on track amid low mortgage rates, and could help support the longest economic expansion on record.
  • Housing starts jumped 16.9% to an annual rate of 1.608 million units last month, the highest level since 2006.

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U.S. homebuilding surged to a 13-year high in December as activity increased across the board, suggesting the housing market recovery was back on track amid low mortgage rates, and could help support the longest economic expansion on record.

Housing starts jumped 16.9% to a seasonally adjusted annual rate of 1.608 million units last month, the highest level since December 2006. The percentage gain was the largest since October 2016. Data for November was revised higher to show homebuilding rising to a pace of 1.375 million units, instead of advancing to a rate of 1.365 million units as previously reported.

Economists polled by Reuters had forecast housing starts would increase to a pace of 1.375 million units in December.

Housing starts soared 40.8% on a year-on-year basis in December. An estimated 1.290 million housing units were started in 2019, up 3.2% compared to 2018.

Building permits fell 3.9% to a rate of 1.416 million units in December after hitting their highest level in more than 12-1/2 years in November.

The housing market is regaining momentum after the Federal Reserve cut interest rates three times last year, pushing down mortgage rates from last year’s multi-year highs. The 30-year fixed mortgage rate has dropped to an average of 3.65% from its peak of 4.94% in November 2018, according to data from mortgage finance agency Freddie Mac.

Though a survey on Monday showed confidence among homebuilders dipped in January, it remained near levels last seen in mid-1999. Builders said they “continue to grapple with a shortage of lots and labor while buyers are frustrated by a lack of inventory, particularly among starter homes.”

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The housing market accounts for about 3.1% of the economy.  Residential investment rebounded in the third quarter after contracting for six straight quarters, the longest such stretch since the 2007-2009 recession. It is expected to contribute to gross domestic product again in the fourth quarter.

Single-family homebuilding, which accounts for the largest share of the housing market, jumped 11.2% to a rate of 1.055 units in December, the highest level since June 2007. Single-family housing starts rose in the Midwest and the populous South. They, however, fell in the Northeast and West.

Single-family housing building permits slipped 0.5% to a rate of 916,000 units in December after rising for seven straight months.

Starts for the volatile multi-family housing segment vaulted 29.8% to a rate of 553,000 units last month. Permits for the construction of multi-family homes fell 9.6% to a rate of 500,000 units.

*The Annual Percentage Rate 2.982% is based on a single family owner occupied home loan with a maximum loan amount of $510,400 a  2.75% interest rate, 1.50 points, 30 day rate lock, Fixed Rate for 15 Years with a payment of $3,463.69, a 80% Loan to Value and a minimum credit score of 740. The  rates and annual percentage rate (APR) will vary depending upon the actual down payment percentages, points and fees for your transaction. The rates may change or not be available at commitment or closing or may be subject to product restrictions. Rates advertised are as of January 9, 2020.  Rates are subject to change without notice. 178 Trinity Pass, Pound Ridge NY 10576 * Registered Mortgage Broker, NYS Banking Department. Loans Arranged Through Third Party Providers . NMLS# 1375 & 42481

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Source: CNBC

Housing Predictions for the New Year

Redfins economic team predicts the housing market will be more competitive in 2020 as the cooldown that began in the second half of 2018 comes to an end. Charleston and Charlotte will lead the nation in home-price gains, thanks to homebuyers moving in from expensive cities. Hispanic Americans will experience the biggest gains in home equity wealth. Climate change will become a much bigger factor for homebuyers and sellers. Read on for Redfin’s six housing market predictions for 2020.

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Prediction #1: Bidding wars will rebound thanks to low mortgage rates and a lack of homes for sale

Low mortgage rates will continue to strengthen homebuying demand, but due to a lack of new homes for sale and homeowners staying put longer, there will be fewer homes on the market in 2020 than in the past five years. More demand and less supply mean bidding wars will rebound in the first quarter. We expect about one in four offers to face bidding wars in 2020 compared to only one in 10 in 2019. This increase in competition will push year-over-year price growth up to 6% in the first half of the year, considerably stronger than the 2% growth seen in the first half of 2019. Supply and demand will become more balanced later in the year as more listings of new and existing homes hit the market, allowing price growth to moderate to 3%.

Prediction #2: 30-year fixed mortgage rates will stabilize at 3.8%

Throughout 2020, 30-year fixed mortgage rates will remain low, hovering around 3.8%. Faced with slowing economic growth, the Federal Reserve will keep interest rates low. Although the housing market is strong, weakness in other sectors, like manufacturing, is pulling down on the economy. Because investors are already bracing for the possibility of a recession, we don’t expect mortgage rates to fall much lower than 3.5% in 2020 even if the economy weakens. And even if the economy strengthens, we expect mortgage rates to stay below 4.1%.

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Prediction #3: For the first time, Hispanic Americans will gain more wealth from home equity than white Americans

In the next decade, Hispanic Americans will, for the first time, gain more home equity than white Americans. That’s because the majority of new homeowners are Hispanic, and home values in Hispanic neighborhoods are increasing faster than in white neighborhoods. There are more Hispanic homeowners in Texas than in any other state and Texas cities are likely to experience strong gains in home values over the next decade as people move here from more expensive places like San Francisco and Los Angeles.

Hispanic families will likely benefit from home-equity gains for generations to come. Hispanic Americans could tap their home equity to finance their children’s education or to start businesses. Over time, this will improve economic equality for Hispanic Americans.

Prediction #4: Climate change will become a bigger financial factor for homebuyers and sellers

In 2020, homebuyers and sellers will take the consequences of climate change into account when deciding to buy. The financial costs of climate change are already becoming more tangible as fire and flood insurance premiums rise. “More people are becoming hyper-sensitive to flood insurance and its costs,” said Houston Redfin agent Irma Jalifi. “They’re thinking about how the weather will change over the next decade and whether there will be more historic floods like we’ve experienced recently. I had a buyer back out of a deal because he found out the property required flood insurance.”

Over the next decade, higher insurance premiums in high-risk areas will make housing even less affordable to more people. And in areas with the highest risk, insurers may stop providing insurance altogether, which means it will be nearly impossible to secure a mortgage in those areas.

Prediction #5: Charleston and Charlotte will lead the nation in home price growth

Affordable Southeast cities like Charleston and Charlotte are attracting an increasing number of migrants from expensive cities, which will drive up home price growth in these areas. Charleston saw a 104% annual increase in the number of Redfin users looking to move in, relative to the number of users looking to move, out in the third quarter of 2019, and Charlotte saw a 44% increase. Migrants are attracted to the growing economies of Charleston and Charlotte—Microsoft is spending $23 million to expand its Charlotte campus, and in Charleston, the new Volvo plant is adding thousands of jobs.

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“A lot of migrants from up north or out west move to Charleston because it is such a lovely place—out of towners fall in love with our Cypress gardens and world-class beaches,” said Redfin agent and team manager Jacie Paulson. “The fact that we have an international airport means that companies are more willing to allow their remote employees to live here because it is easy to travel back and forth to headquarters. We also have a strong local economy with jobs at Boeing, Volvo, and in the military.”

Prediction #6: More city streets will become car-free

In 2020, we will see more cities favor green modes of transit and actively discourage driving. Some cities already have plans in the works—San Francisco’s Market Street will transform into a car-free corridor in 2020, and New York City drivers will have to pay to drive into the heart of the city beginning in 2021. In cities that become less car-friendly, those that frequently spend time in the city-center will place more value on a commute that doesn’t require a car and move to either the walkable city center or close to public transit. Meanwhile, some people will choose to avoid the city-center altogether and put a higher value on homes in the suburbs where they can work, play and live.

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Source: Redfin

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The example above is not an offer to lend. The rates are for example reasons only. Rates may differ depending on loan amount, credit score and other factors. North Atlantic Mortgage Corp. 178 Trinity Pass Rd. Pound Ridge, NY. 10576. NY Dept of Financial Services Registered Mortgage Broker *Loans Arranged Through Third Party Providers. NMLS #1375 All rates referenced on this website are subject to change without notice. Copyright © 2018 NorthAtlanticMortgage.com 

Three Myths When it Comes to Refinancing

When it comes to refinancing your home, there are many supposed truths out there leading to inaccuracies on money saving mortgage options.

  1. You must have more than 2 points to lower your rate and make it worth your while.
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  3. The market is unpredictable so I’ll wait.
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Home Sales doing Well

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Some Highlights:

  • The National Association of REALTORS® surveyed their members for the release of their Confidence Index.
  • The REALTORS® Confidence Index is a key indicator of housing market strength based on a monthly survey sent to over 50,000 real estate practitioners. Practitioners are asked about their expectations for home sales, prices, and market conditions.
  • Homes across the country are selling quickly, in an average of just 31 days.
  • 49% of homes sold in less than a month.

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Source: KCM

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Mortgage rates Decrease

October 10, 2019

Despite the economic slowdown due to weakening manufacturing and corporate investment, the consumer side of the economy remains on solid ground. The fifty-year low in the unemployment rate combined with low mortgage rates has led to increased homebuyer demand this year. Much of this strength is coming from entry-level buyers – the first-time homebuyer share of the loans Freddie Mac purchased in 2019 is forty-six percent, a two-decade high.

Primary Mortgage Market Survey®

U.S. weekly averages as of 10/10/2019

refi home loan new york mortgage rates

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Source: Freddie Mac

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Home price gains slowed in June, but low mortgage rates may heat them up again

KEY POINTS
  • Home prices in June rose 3.1% annually, according to the S&P CoreLogic Case-Shiller national home price index. That’s down from 3.3% annual gain in May.
  • The 10-City Composite annual increase came in at 1.8%, down from 2.2% in May. The 20-City Composite rose 2.1% annually, down from 2.4% in the previous month.
  • Another read showed home prices in the second quarter up 5% from the second quarter of 2018.

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Home prices are still gaining nationally, but not nearly as much as they have been over the past few years.

Prices in June rose 3.1% annually, according to the S&P CoreLogic Case-Shiller national home price index. That’s down from 3.3% annual gain in May.

The 10-City Composite annual increase came in at 1.8%, down from 2.2% in May. The 20-City Composite rose 2.1% annually, down from 2.4% in the previous month.

“Home price gains continue to trend down, but may be leveling off to a sustainable level,” S&P Dow Jones Indices’ Philip Murphy said in a release. “Fewer cities (12) experienced lower YOY price gains than in May (13).

Phoenix, Las Vegas and Tampa reported the highest annual gains among the 20 cities. In June, Phoenix saw a 5.8% annual price increase, followed by Las Vegas with a 5.5% increase and Tampa with a 4.7% increase. Six of the 20 cities reported greater price increases in the year that ended in June versus the year that ended in May. Seattle was the only city to show prices down (1.3%) from June 2018.

Home prices will likely get a boost from the significant, continuing drop in mortgage rates that began in the spring. The average rate on the 30-year fixed mortgage is now a full percentage point lower than it was a year ago. Lower mortgage rates give consumers more buying power and tend to push home prices higher.

“The U.S. National Home Price NSA Index YOY price change in June 2019 of 3.1% is exactly half of what it was in June 2018,” said Murphy, managing director and global head of Index Governance at S&P Dow Jones Indices. “While housing has clearly cooled off from 2018, home price gains in most cities remain positive in low single digits. Therefore, it is likely that current rates of change will generally be sustained barring an economic downturn.”

Another read showed home prices in the second quarter of this year up 5% from a year earlier. The measure, from the Federal Housing Finance Agency, looks at prices on homes with loans backed by Fannie Mae and Freddie Mac, which are conforming loans. It therefore does not capture the high end of the market. It shows home price gains decelerating for the fifth straight quarter, but also notes that may be about to change.

“We expect some positive effect of the mortgage interest rate decline on housing demand as well as home price appreciation given that rates have fallen a full percentage point since the end of 2018 to below 4% in August,” Lynn Fisher, FHFA’s senior advisor for economics, said in the release. “This should lead to a longer summer buying season and potentially a higher rate of appreciation on a seasonally adjusted basis than would have previously been expected in the third quarter.”

Source: CNBC

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Weird Low Mortgage Rates due to the inverted yield curve

The gap between ARMs and fixed-rate loans is now really small because of the inverted yield curve. It is a rare scenario where long-term interest rates suddenly fall below short-term interest rates. ARM rates are kind of all over the place lender to lender because they are a very small percentage of new loan originations today, around 6% of total mortgage application volume, according to the Mortgage Bankers Association.

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The inverted yield curve isn’t just spooking people over a possible recession – it’s doing weird things to mortgage rates, too.

Traditionally, adjustable-rate mortgages, or ARMs, offer lower interest rates than fixed-rate loans, because they are slightly riskier, and borrowers don’t want to pay more for more risk. ARMs can carry a fixed rate for five, seven or 10 years, and most today require some principal payment as well. No matter what the length of the fixed-rate term, they are all amortized over 30 years, so the payments will be relatively comparable to fixed-rate loans.

It is therefore very odd to suddenly see ARMs showing higher interest rates than the traditional 30-year fixed, which is what Bankrate.com is currently showing for average purchase mortgage rates. Refinance rates are still lower for ARMs.

So what’s going on? First, ARM rates are all over the place lender to lender because they are a very small percentage of new loan originations today, around 6% of total mortgage application volume, according to the Mortgage Bankers Association.

“The averages you see on the site are based on what quotes have been posted to the site, so small and inconsistent sample size on the ARMs,” said Greg McBride, chief financial analyst at Bankrate.com. “Our weekly national survey on the other hand, does show what we’d expect to see – ARM rates lower than fixed. The gap isn’t big of course, as we’ve got a flat to inverted yield curve, but the traditional relationship holds.”

And that’s precisely what is so interesting — that flat to inverted yield curve. The gap between ARMs and fixed-rate loans is now really small because of the inverted yield curve, which, without getting too technical, is a rare scenario where long-term interest rates suddenly fall below short-term interest rates. In the past, an inverted yield curve has signaled an impending recession.

“Longer-term rates (like the 30-year mortgage) are now equal to or lower than one-year rates (like the indexes used with most ARMs),” explained Guy Cecala, publisher and CEO of Inside Mortgage Finance. “Bad time to get an ARM.”

Of course we are looking at averages here, and every borrower has a different financial scenario – credit score, net worth, loan down payment, etc. – and will therefore be offered a different rate. And of course rates vary depending on the lender, especially when it comes to ARMs.

“Rates are all over the place. Some lenders want/need the variable cash flows to offset fixed-rate exposure,” said Matthew Graham, chief operating officer of Mortgage News Daily. “People want variable rates at the beginning of a Fed rate-cutting cycle, and lenders generally would prefer fixed rates of return when rates are declining.”

Source: CNBC