Mortgage Rates Jump Slightly

Fixed-rate mortgages increased for the second consecutive week. However, further increases are not predicted in the short-term. Key averages previously hit their lowest levels since June in the month of October. Despite the recent increase, fixed-rate mortgage loans remain affordable by historical standards.

The recent rise in rates is attributed to signals of economic strength, specifically, improved employment numbers for the month of October.

“Fixed mortgage rates increased this week following stronger than expected economic data releases,” Frank E. Nothaft, Freddie Mac’s vice president and chief economist, said in a statement. “Nonfarm payrolls increased by 204,000 in October, above the consensus forecast. In addition, revisions added 60,000 additional jobs to the prior two-month releases.”

The average rate on a 30-year mortgage rose to 4.35 percent this week, an increase of 0.19 percentage point, according to the latest survey from mortgage buyer Freddie Mac. The 30-year average was 4.16 percent a week ago and was trending at 3.34 percent a year ago.

The average rate on a 15-year mortgage saw a modest increase, increasing by 0.08 percentage point. Previously at 3.27 percent, the 15-year average is now 3.35 percent. One year ago, it averaged 2.65 percent, an increase of 0.7 percentage point year-over-year.

The averages on hybrid adjustable-rate mortgage loans were mixed. The average on a five-year ARM increased by 0.05 percentage point week-over-week and is now at 3.01 percent. The one-year ARM average was static, remaining at 2.61 percent week-over-week.

Looking forward, rates are expected to hold steady in the short-term. In the latest Mortgage Rate Trend Index by, 50 percent of the experts and analysts polled believed that rates will remain unchanged over the next week, while 30 percent predicted rates will trend downward .

“Mortgage rates spiked after the better-than-expected headline number for last Friday’s employment report. Now tapering talk seems to be delaying the date that the Fed slows its assets purchases. But the last time rates spiked like this, there was a noticeable slowdown in home purchase applications,” said Michael Becker, WCS Funding Group mortgage banker. “I think the Fed is aware of this and will attempt to calm the markets over the coming week. Therefore, I see mortgage rates holding steady in the coming week.”

How to Market Your Home for Maximum Exposure

Once you’ve made the commitment to sell your home, chosen a Realtor to represent you, and established a list price, it’s time to work with your Realtor to market your property so it sells as quickly as possible. Your Realtor should share a marketing plan with you, but the more you know about the process of selling your home the easier it is to support your Realtor’s efforts.

Pre- Market Tips

The day your home goes on the market it should be in prime condition and priced right to attract the most potential buyers. While your Realtor can help you determine an appropriate price and can offer suggestions to make your home more appealing, your job is to put in the work to get your home pristine clean and to remove clutter and personalization. Buyers want to see a home where they can visualize themselves living. If buyers see an overstuffed closet, they’ll assume the home lacks storage space; and if your kitchen counters are cluttered, they’ll think the space is too small.

Provide your Realtor with tips about what you love best about your home and community that can be incorporated into your marketing materials.

Your Realtor can advise you on what you need to repair before putting your home on the market. You can also visit other homes that are for sale, or even local model homes for ideas on ways to present your home to potential buyers.

What to Expect From Your Realtor

Many Realtors have experience staging homes, or they can bring in a stager to rearrange your place. In addition, your Realtor should market your home in multiple ways:

  • Research the market to identify potential buyers to target for direct mail,
  • Reach out to other real estate brokers and agents who work with buyers in your price range,
  • Take excellent photos or hire a professional photographer to showcase your home online with attractive pictures,
  • List your home on the local MLS (Multiple Listing Service) and make sure it receives maximum exposure on multiple websites,
  • Take a video of your home or produce a virtual tour with numerous photos so your home can be viewed in-depth by buyers looking online.

Once buyers begin visiting your home or contacting your Realtor, your agent should respond as quickly as possible to keep the momentum going. Every visitor to your home or their agent should be contacted by your Realtor to get feedback on your home and to gauge their interest.

What Your Realtor Should Expect From You

While your Realtor does the heavy lifting when it comes to marketing, as a seller you need to support your Realtor in several ways:

  • Keep your home as clean, neat and odor-free as possible while your home is on the market. This may mean that you have to give up cooking your favorite liver-and-onions dish and that you have to bribe your kids to make their beds and take out the trash every day.
  • Make your home as available as possible to buyers, no matter how inconvenient it is for you and your family. Your home won’t sell if no one can see it.
  • Leave the house when buyers are there, since studies show that buyers will linger and look more carefully when the homeowners aren’t there.
  • Lock up your pets or take them away when buyers are visiting, especially during an open house when multiple visitors are expected.
  • Provide information to buyers about community amenities or neighborhood sports leagues so they can appreciate your home’s location.

If you and your Realtor develop a team approach to selling, you’ll benefit from a quicker and more pleasant real estate transaction.


Advantages to Buying a Home With Cash







Buying a home with cash has definite advantages in today’s market. National Association of Realtors® research on cash sales shows that about 30 percent of residential sales are cash transactions. Among investors and international buyers, more than 70 percent of properties are bought outright. If you can afford to buy up front, the advantages are many:

  • Sellers are likely to favor buyers who can pay in cash.
  • The home price may be reduced for those who pay in full up front.
  • All-cash purchases streamline the home-buying process: No loans means less paperwork and no delays for mortgage approval.
  • Cash buyers can save money on closing costs, bank appraisals, mortgage applications and fees, title insurance, and so on.
  • Cash purchases eliminate the risk of loan denial.
  • Cash buyers pay much less for their homes in the long run: No loans means no interest.
  • Cash buyers never have to worry about losing their homes because they can’t afford to repay their mortgage loans.
  • Cash buyers gain full, immediate equity in their home.

Financially and emotionally, paying with cash benefits the home buyer.

Sellers prefer cash buyers
Home sellers generally prefer quick, smooth sales. They know that even buyers who have been preapproved for mortgages might be denied by the lender later on. For example, a buyer who is an independent contractor might have difficulty proving two years of regular employment, or a buyer depending on a family member for a personal loan might later opt out (or the relative might). Therefore, when possible, sellers prefer to steer clear of buyers who have to apply for a mortgage. If you are buying with all cash, you have greater negotiating power on price, closing time, repairs, and more. Sellers are often willing to reduce the house’s price for cash buyers.

Cash purchases avoid the risk of low appraisals
Home appraisals are notoriously fickle. Lenders determine a home’s worth by weighing it against comparable sales — other homes in the neighborhood that may have sold at low prices for unknown reasons. A low appraisal could lead the lender to reduce the amount of the loan offer, even after seller and buyer have agreed on a price. If the loan amount comes up short, the buyer often cannot afford to buy the home. All-cash buyers sidestep mortgage applications, avoiding the need for a potentially deal-breaking home appraisal.

Cash purchases save money and time
Indisputably, cash purchases carry lower costs. Mortgage interest on a 30-year loan can double or triple the original purchase price. Additionally, closing costs are significantly lower when purchases are made with cash. Cash purchases also save buyers valuable time, eliminating the need to gather elusive documents and search for the optimal lender.

Peace of mind is priceless
Most importantly, all-cash purchases bring an inviolable sense of security. Owning your home outright means never having to worry about covering your mortgage. In the face of disaster, such as job loss or injury, full ownership eliminates the risk of losing your home to foreclosure. Moreover, if you have paid cash, you will have excellent equity in the house. In case of financial emergency, you can draw on that equity for quick cash.

Figure out how to pay in cash 
Buying your house with cash might seem like an impossible dream. Here are some tips to help you achieve it:

  • Set aside unexpected windfalls, such as work bonuses or inheritances.
  • Lock money in a long-term CD to earn interest.
  • Once you have accrued cash, look for a house you can afford without borrowing extra money.
  • Consider moving to a less populated area, further from a big city, where home prices are likely to be lower.
  • Avoid the temptation to waste money. Tell your friends and family about your goal of buying a home; they will help keep your spending on track.

Gilan Gertz wrote this article.

New-Home Prices Soar, Creating Urgency


Last month the median price for new homes hit a record high and home sales soared, boosting the new-home sector’s recovery, according to figures released from the U.S. Census Bureau Thursday. The median price of a new home sold in April was $271,600, which was 8.3 percent higher than the previous month and 13.1 percent higher than one year ago, the Census Bureau reported.

“While the cost of constructing homes is rising due to tightened supplies of materials, lots, and labor, to some extent, this may be creating greater urgency among potential buyers,” says Rick Judson, chairman of the National Association of Home Builders.

New-home sales in April also soared to their second highest level since the summer of 2008, rising 2.3 percent. Sales are 29 percent higher than year-ago levels. Still, the pace of new-home sales in April of 454,000 is still a far cry from the 700,000 level that most economists consider healthy for the sector.

“Today’s report is further evidence of the gradual, consistent improvement we have been seeing in housing market conditions over the past year,” says NAHB Senior Economist Robert Denk. “We’re now about half-way back to what could be considered a full recovery, and we do expect to see continual, solid gains in both starts and sales of new homes going forward.”

Regionally, new-home sales in April rose by the most in the West—10.8 percent—and 3 percent in the South. Meanwhile, new-home sales dropped in April by 16.7 percent in the Northeast and 4.8 percent in the Midwest.

Source:New Home Sales Up 2.3% in April as Median Price Hits Record High,” The Associated Press (May 23, 2013)

Rising Housing Market Likely to Lift Job Mobility


Home owners are starting to feel freer to move where the jobs are, Reuters reports, as worries about homes that won’t sell or will sell at a loss begin to fade.

Since early 2012, home prices in the major metro areas have been rising. Homes are also selling faster: It took 62 days, on average, to sell a home, compared with 91 days one year prior, according to March data from the National Association of REALTORS®.

The increase in mobility from the recovering housing market is expected to have a hand in lowering the jobless rate.

“Until the real estate market picked up, people wouldn’t even consider a move without the certainty that they could sell their homes,” Jerry Funaro, vice president of global marketing for TRC Global Solutions, a Milwaukee-based relocation service, told Reuters. “Companies are now more inclined to make offers since we’re seeing real estate markets across the country coming back.”

The number of people who moved last year increased to 35.6 million, with the mover rate climbing to 12 percent, according to the U.S. Census Bureau. That marked an increase over the 11.6 percent low set in 2011.

“It’s not a huge gain, but when you consider that for two years, we’ve had the lowest migration rates since World War II, any move up is good news,” William Frey, a demographer at the Brookings Institution in Washington, told Reuters.

Meanwhile, in April, the jobless rate dropped to its lowest point in more than four years, reaching 7.5 percent, due to an increase in hiring among employers.

Source: “Insight: Housing improvement may herald return of U.S. workforce mobility,” Reuters (May 13, 2013)

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Housing Shortage Will Dampen Spring Market


The housing recovery is progressing, but a shortage of homes on the market will limit the number of home sales this spring selling season, industry insiders say.

“If we don’t see more people listing their properties, I don’t think we will see the home sales volume increase that we are accustomed to seeing,” Glenn Kelman, chief executive officer of Redfin told Reuters. “There are far more buyers than there are sellers on the market. We would have a huge boom spurred by low interest rates if there were more inventory on the market.”

Still, the National Association of REALTORS® predicts existing-home sales will rise around 7 or 8 percent this spring compared to year ago levels.

In some areas where inventories are particularly constrained—like Washington, D.C., New York, and several California cities—homes are selling within hours of being placed on the market.

“The demand for properties is insane. The bidding wars that are going on, there is not enough inventory and it has become truly a seller’s market again,” says Neil Garfinkel, real estate attorney at Abrams Garfinkel Margolis Bergson in New York.

Source: “Analysis: Supply crunch to take steam out of home sales,” Reuters (April 3, 2013)

Big Discounts on Foreclosures Fading, Economist Says


Home buyers may not get as great of a deal on a foreclosure as they once did, according to Paul Diggle from Capital Economics in a new report.

Foreclosure starts are falling and the inventory of foreclosures has been decreasing, which has caused the discount on foreclosures to lessen.

The discount on foreclosed homes compared to other homes has fallen to a 12 percent average, according to Diggle. That was about the same percentage prior to the housing crash, he says. Last year the foreclosure discount averaged about 30 percent.

“Ultra-low mortgage interest rates and steady, if not spectacular, job creation could mean that the delinquency rate and foreclosure start rate are falling quickly,” Diggle writes.

Source: “Those Amazing Deals on Foreclosed Homes Are Disappearing,” Business Insider (March 7, 2013)

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Fannie, Freddie Footprint to Shrink With New Company


The Federal Housing Finance Agency (FHFA) announced Monday that mortgage giants Fannie Mae and Freddie Mac will create a new joint company for securitizing home loans. The move is viewed as a step toward shrinking the government’s role in the mortgage market.

The government-sponsored enterprises, which started receiving taxpayer bailout money in 2008, help finance about two-thirds of U.S. mortgages. Edward DeMarco, the acting director of FHFA, says he wants to shrink Fannie and Freddie’s footprint in order to reduce the risks to taxpayers.

“The overarching goal is to create something of value that could either be sold or used by policymakers as a foundational element of the mortgage market of the future,” DeMarco told the National Association for Business Economics.

The new company will be owned by Fannie Mae and Freddie Mac. It is not expected to begin securitizing loans until next year. The new company will have a separate chief executive and board. Congress will have to decide how the securitization platform works as well as determine whether it should be privatized.

“We are on a path to replace the outdated proprietary operational systems of Fannie and Freddie,” DeMarco said. “It could be turned to some form of a market utility.”

Source: “Fannie, Freddie to Form New Company,” Reuters (March 4, 2013)

Builders Want Agents’ Help in Attracting Buyers


In March, some of the nation’s largest home builders will band together to launch a multimillion-dollar campaign aimed at persuading potential buyers about the appeal of new homes, but the campaign is mostly targeted at first winning over the buyers’ real estate professionals.

Eighty-four percent of 1,000 buyers recently surveyed say they are working with a real estate agent or expect to, according to a study by Chadwick Martin Bailey, a consumer research company.

“That’s a statistic [builders] can’t ignore,” says Jonathan Smoke, chief economist at Hanley Wood, a publishing company centered on the building industry. Builders “need them to sell their value.”

The mostly digital ad campaign, “Start Fresh, Buy New,” is being launched by Builders Homesite Inc, a high-tech marketing company owned by a consortium of 32 of the country’s largest builders. The campaign will emphasize new-homes’ quality of construction, safe neighborhoods, improved floor plans, and lower maintenance costs. It will also welcome agents and brokers to new-home communities and emphasize why “new” is better.

The campaign also will attempt to get new-home communities on the multiple listing service. Often new-homes are not on the MLS until the home is completed.

Builders currently account for about 7 percent of all home sales, but historically that percentage is usually around a 15 to 20 percent marketshare.

“It’s not that people aren’t buying, it’s that they’re buying existing homes,” says Tim Costello, BHI chief executive. “It’s not a demand problem, it’s a marketing and messaging problem. Other builders aren’t the competition, it’s existing houses.”

Source: “Builders Hope REALTORS(R) Will Help Them Win Back Buyers,” Inman News (Jan. 28, 2013)

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Housing Recovery to Make a Transition in 2013


The new year is expected to bring about a brighter housing market, thanks to an improving job market and record-breaking mortgage rates.

“Hopefully, we’ll look back at 2012 as a transition year,” says Steve Storti, a senior vice president of marketing at Prudential Fox & Roach REALTORS®. “Just as you can only declare a recession after the fact, maybe we’ll be able to say this is when it changed over.”

Home values are moving up across the country. For example, Phoenix has seen home prices soar 21.7 percent this year. The National Association of REALTORS® reported last week that previously owned home sales increased 5.9 percent in November compared with October and sales were up 14.5 percent year-over-year.

Helping to contribute to the rise in home prices is the decline in for-sale inventories. Inventories in November were at the lowest level since December 2001 at 4.8 months of supply.

Meanwhile, sales of new homes posted at their highest pace in two years in November and median sales prices inched higher to $246,200 compared to $237,500 in October. However, IHS Global Insight is forecasting that new-home sales still have a long way to recover and likely will not return to normal sales levels until 2015.

Source: “Housing Prices Show Signs of Strengthening,” The Philadelphia Inquirer (Dec. 29, 2012)