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The Home Price Index Shows Some Regions Up, Some Regions Down Posted: 26 Feb 2010 06:45 AM PST Earlier this week, the private-sector Case-Shiller Index showed home prices slightly lower between November and December. Thursday, the public-sector Home Price Index showed the same. Publishing on a 2-month lag, the Federal Home Finance Agency said home prices fell by 1.6 percent nationally in December. And that's an average, of course. Some regions performed well in December as compared to November, others didn't. Values in the Middle Atlantic states improved slightly Values in New England were essentially unchanged Values in the Mountain states sagged, down 3.5% These aren't just footnotes. They're an important piece toward understanding what national real estate statistics really mean. In short, "national statistics" are just a compilation of a bunch of local statistics. For example, if we dig deeper into the FHFA Home Price Index 70-page report, we find that cities like Terre Haute, IN, Buffalo, NY, Amarillo, TX all posted year-over-year home price gains even though the national data just state it. The gains in these cities were offset by losses in other cities nationwide. Furthermore, it's a sure bet that those same cities, you could find neighborhoods that are thriving, and others that are not. Just because the city shows higher home values overall, it won't necessarily be the case for every home in the city. Every street in every neighborhood of every town in America has its own "local real estate market" and, in the end, that's what should be most important to today's buyers and sellers. National data helps identify trends and shape government policy but, to the layperson, it's somewhat irrelevant. So, when you need to know whether your home is gaining or losing value, you can't look at the national data. You have to look at your block -- what's selling and not selling -- and start your valuations from there.

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As The Supply Of New Homes Grows, So Does The Opportunity For A "Good Deal" Posted: 25 Feb 2010 06:45 AM PST The housing recovery showed particular weakness in the New Homes Sales category last month -- good news for homebuyers around the country. A "new home" is a home for which there's no previous owner. New Home Sales fell 11 percent from the month prior and posted the fewest units sold in a month since 1963 -- the year the government first started tracking New Home Sales data. Right now, there are roughly 234,000 new homes for sale nationwide and, at the current sales pace, it would take 9.1 months to sell them all. This is nearly 2 months longer than at October 2009's pace. The reasons for the spike in supply are varied: The original home buyer tax credit expired in November Weather conditions were awful in most of the country in January Weak employment and consumer confidence continue to hinder big ticket sales Now, these might be less-than-optimal developments for the economy as a whole, but for buyers of new homes, it's a welcome turn of events. Home prices are based on supply and demand, after all. As a result, this season's home buyers may be treated to "free" upgrades from home builders, plus seller concessions and lower sales prices overall. It's all a matter of timing, of course. New Home Sales reports on a 1-month lag so it's not necessarily reflective of the current, post-Super Bowl home buying season. And from market to market, sales activity varies. That said, mortgage rates remain low, home prices are steady, and the federal tax credit gives two more months to go under contract. It's a favorable time to buy a new home.

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December 2009 Case-Shiller Data Shows Battered Markets In Bona Fide Recovery Posted: 24 Feb 2010 06:45 AM PST Using data compiled in December, Standard & Poors released its Case-Shiller Index Tuesday. The report shows home prices down just 2.5% on an annual basis, a figure much lower than the 8.7% annual drop reported after Q3. According to Case-Shiller representatives, the housing market is "in better shape than it was this time last year", but some of the summer's momentum has been lost. 15 of 20 tracked markets declined in value between November and December 2009. Meanwhile, it's interesting to note the 5 markets that didn't decline -- Detroit, Los Angeles, Las Vegas, Phoenix and San Diego. Each of these metro regions were among the hardest hit nationwide when home prices first broke. Now, they're leading the pack in price recovery. For some real estate investors, that's a positive signal. But we also have to consider the Case-Shiller Index's flaws because they're big ones. As examples: Case-Shiller data is reported on a 2-month lag The Case-Shiller sample set includes just 20 U.S. cities There's no "national real estate market" -- real estate is local That said, the Case-Shiller Index is still important. As the most widely-used private sector housing index, Case-Shiller helps to identify broader housing trends and many people believe housing is a key element in the economic recovery. If the markets that led the housing decline will lead the housing resurgence, December's data shows that full recovery is right around the corner.

How You Can Get The Most Accurate, Real-Time Mortgage Rate Quotes Available Posted: 23 Feb 2010 06:45 AM PST You can't get your mortgage rates from the newspaper. Last week proved it. Again. Friday morning, headlines and around the country read that mortgage rates were down 0.04 percent, on average, since the week prior. A sampling of said headlines includes: US Mortgage Rates Drop For 2nd Straight Week (Reuters) Mortgage Rates On 30-year US Loans Fall To 4.93% (Business Week) 30-Year Fixed Mortgage Rate Falls Farther Below 5% (Marketwatch) The story behind the headline was sourced from the Freddie Mac Primary Mortgage Market Survey, am industry-wide mortgage rate poll of more than 100 lenders. The PMMS has reported mortgage rate data to markets since 1971 and is the largest of its kind. Unfortunately, rate shoppers can't rely on it. See, unlike governments and private-sector firms, when consumers are in need mortgage rate information, they need the information delivered in real-time; for making decisions on-the-spot. Consumers need to know what rates are doing right now. The Freddie Mac survey can't offer that. According to Freddie Mac, the survey's methodology is to collect mortgage rates from lenders between Monday and Wednesday and to publish that data Thursday morning. The survey results are an average of all reported mortgage rates. The problem is that mortgage rates change all day, every day. The PMMS results are skewed, therefore, by methodology. And, meanwhile, the issue was compounded last week because mortgage rates shot higher Wednesday afternoon -- after the survey had "closed". The market deterioration ran into Thursday, too -- again, unable to be captured by Freddie Mac's PMMS. Although the newspapers reported mortgage rates down last week, they weren't. Conforming mortgage rates were higher by at least 1/8 percent, or roughly $11 per $100,000 borrowed per month. In some cases, rates were up by even more. Newspapers and websites can give a lot of good information, but pricing is far too fluid to rely on a reporter. When you need to know what mortgage rates are doing in real-time, make sure you're talking to a loan officer. Otherwise, you may just be getting yesterday's news.

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What's Ahead For Mortgage Rates This Week : February 22, 2010 Posted: 22 Feb 2010 06:45 AM PST Mortgage markets had a terrible, holiday-shortened week last week as Wall Street responded to worse-than-expected inflation data and action from the Federal Reserve. Mortgage bonds sold off with force, causing mortgage rates to rise for the second week in a row. Last week was a bad week to float a mortgage, to say the least. Rates rose by the largest margin in any week since late-2009. The two biggest stories from last week both came from the Federal Reserve. The first was the release of the FOMC January meeting minutes which showed more confidence in the U.S. economy than Wall Street expected, and the second was the Fed's surprise announcement to raise the nation's Discount Rate to 0.75%. Both sparked risk-taking on Wall Street and bonds sold-off as a result. Now, the Fed Funds Rate won't climb anytime soon and neither will Prime Rate, but the Fed has sent a clear message to the markets -- The Era of Loose Monetary Policy is over. This week, there's a lot of economic data set for release. Tuesday : Case-Shiller Home Price Index, Consumer Confidence Wednesday : New Home Sales Thursday : FHFA Home Price Index, Initial Jobless Claims Friday : Existing Home Sales, Personal Consumption Expenditures With markets already on edge, any better-than-expected results should be bad for mortgage rates. After last week's performance, conforming mortgage rates have now unwound most their January gains. If you're waiting for the right time to lock, it may have been 2 weeks ago. Consider locking in this week to protect against any further deterioration in price.

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Housing Starts Soar To 6-Month High In January... Or Do They? Posted: 19 Feb 2010 06:45 AM PST Sometimes, headlines for housing can be misleading and this week gave us a terrific example. On Wednesday, the Commerce Department released its Housing Starts data for January 2010. The data showed starts at a 6-month high. A “Housing Start” is a privately-owned home on which construction has started. Headlines on the Housing Starts story included: U.S. Housing Starts Hit 6-Month High (Reuters) U.S. Economy Receives Home Building Boost (Shepparton) Housing Starts Post Sharp Rebound (ABC) Based to the headlines, the housing market looks poised for rapid growth through the Spring Market. The real story, though, is that although Housing Starts increased by close to 3 percent last month, the growth is mostly attributed to buildings with 5 or more units. This includes apartments and condominiums -- a sector of the housing market that's notoriously volatile. If we isolate Housing Starts for single-family homes only, we see that starts grew by just 7,000 units last month and have failed to break a range since June 2009. January's tally is slightly below the 8-month average. Perhaps more interesting than the Housing Starts, though, is the Commerce Department's accompanying data for Housing Permits. After a 5-month plateau that ended in November, Housing Permits posted multi-year highs for the second straight month. According to the Census Bureau, 82% of homes start construction within 60 days of permit-issuance. One reason permits are up is that home builders want to capitalize on the federal homebuyer tax credit's dwindling time frame. Sales are expected to spike in March and April and more homes will come online to deal with that demand. Home buyers should shop carefully, but with an eye on the clock. As the tax credit's April 30, 2010 deadline approaches, competition for homes may be fierce.

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The Best And Worst Cities For Commuters (2010 Edition) Posted: 17 Feb 2010 06:45 AM PST According to the Census Bureau, 2.8 million people commute to work 90 minutes or more each day, in each direction. Now, your daily commute may not be as long, but time spent in cars, trains and buses is time away from work and from family. Drive-time can affect a person's Quality of Life and it's one reason why Forbes Magazine's Best and Worst Commutes is worth reviewing. Measuring travel time, road congestion and travel delays in the 60 largest metropolitan areas, Forbes ranks city commutes from best-to-worst with Salt Lake City topping the list and Tampa-St. Petersburg finishing it. The Top 5 Commutes, as compiled by Forbes: Salt Lake City, Utah Buffalo-Niagara Falls, New York Rochester, New York Milwaukee-Waukesha-West Allis, Wisconsin Albany-Schenectady-Troy, New York The bottom 5 are Tampa-St. Petersburg, Detroit, Atlanta, Orlando, and Dallas-Forth Worth. Long commutes shouldn't deter you from moving to a particular city, but the potential commute should be consideration. Before making an offer on your next home, make a rush-hour commute to work from your potential new neighborhood. Then imagine doing it every day. You can read the complete Forbes list of Best and Worst Cities for Commuters on its website.

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What's Ahead For Mortgage Rates This Week : February 16, 2010 Posted: 16 Feb 2010 06:45 AM PST Mortgage markets worsened last week on general profit-taking in the U.S. bond market, combined with talk of a coordinated rescue effort for Greece and its debt burden. Mortgage-backed bonds sold off, causing conventional and FHA mortgage rates to rise. There wasn't much hard data on which to trade last week, either, so momentum took markets farther than they otherwise might have moved on their own. It marked the first time in 5 weeks that rates rose for rate shoppers. This week, data returns. Expect mortgage market movement. Some of the week's more important releases include: Housing Starts and Building Permits (Wednesday) The release of the last month's FOMC Minutes (Wednesday) Business and consumer inflation figures (Thursday and Friday) Inclement weather may have impacted last month's Housing Starts reading so pay closer attention to Building Permits. Permits precede actual construction and can be more indicative of economic optimism. If permit readings are strong, it should be a negative for mortgage rates. The same is true for the FOMC Minutes. Last month's FOMC post-meeting press-release was decidedly middle-of-the-road, but the statement is just a summary of the Fed's 2-day meeting, boiled down to a few paragraphs. Wednesday's release of the FOMC Minutes will reveal the deeper discussions among members of the Fed. Wall Street will mine it for clues about the future of the economy. If Wall Street senses optimism coming from the Fed -- again -- mortgage rates should rise. And, lastly, keep an eye on Thursday and Friday's inflation data. Inflation is bad for mortgage rates so a higher-than-expected reading should spark a bond market sell-off. Since mid-December, mortgage rates have moved within a tight range and there's little reason for rates will break this range this week. However, we are near the top of the channel. If you know you're going to need a rate locked soon, it's probably best to do early in the week.

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How Rising Consumer Sentiment Is Linked To Higher Home Prices Posted: 12 Feb 2010 06:45 AM PST Consumer Sentiment has been on the rise since last February and it's something to which home buyers should pay attention. The affordability of your next home may hinge on consumer confidence. As the economy recovers from a near-the-brink recession, many of the elements of a full recovery are in place. Business investment is returning, household spending is expanding, and financial systems are gaining strength. Consumer confidence is at a 2-year high. What's missing from the recovery, though, is jobs growth. Another net 20,000 jobs were lost in January. Data like that hinders economic growth. That said, twenty-thousand jobs lost is a much better figure than the several hundred thousand that were shed per month throughout early-2009, but it's still a net negative number. Not only does household income drop when Americans lose jobs but so does the average American's confidence in his or her own economic future. This is one reason why jobs growth is so closely watched by Wall Street -- jobs are linked to higher confidence levels which, in turn, is believed to spur consumer spending. Consumer spending represents 70% of the U.S. economy. As confidence rises, it could be good news for the economy, but bad news for home buyers. More spending expands the economy and, all things equal, that leads mortgage rates higher. Same for home prices. More confidence means more buyers which, in turn, squeezes the supply-and-demand curve in favor of sellers. Later this morning, the University of Michigan will release its February Consumer Sentiment survey. If the reading is higher-than-expected, prepare for mortgage rates to rise and home affordability to worsen.

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In Pictures: The Severity Of The Foreclosure Crisis Depends On Where You Live Posted: 11 Feb 2010 06:45 AM PST Foreclosures stories dominate the national housing news. It seems at least one foreclosure-related story makes its way to the front page or the nightly news every week. But for as much as the foreclosure filing statistics can be astounding -- over 300,000 homes were served last month alone -- the prevalence of foreclosures depends on where you live. As reported by RealtyTrac, just 4 states accounted for more than half of the country's foreclosure-related activity last month. California : 22.7 percent of all activity Florida : 14.9 percent of all activity Arizona : 6.7 percent of all activity Illinois : 5.7 percent of all activity The other 46 states (and Washington D.C.) claimed the remaining 49.9%. However, just because foreclosures are concentrated geographically, that doesn't make them less important to homebuyers around the country. There's been more than 1.4 million foreclosure filings in the last 12 months and that's a figure that can't be ignored. Distressed properties now play a role in one-third of all home resales. Therefore, if you're in the market for a foreclosed home, here's a few things to keep in mind. Properties are usually sold "as-is" and may not be up to living standards. Be sure to physically inspect the home before buying it. Buying a home from a bank is rarely as streamlined as buying from an individual homeowner. Be prepared for delays and long closings. Foreclosures aren't always listed for sale publicly. Ask your real estate agent how to access the complete foreclosure inventory. In order to use the federal homebuyer tax credit, you must be under contract for a home by April 30, 2010 and closed by June 30, 2010. That doesn't leave much time to find a bank-owned home and make it to closing. If you're serious about buying foreclosures, it's probably best to start your search soon.

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Separating FHA Fact From Fiction : Mortgage Insurance Premiums Posted: 10 Feb 2010 06:45 AM PST The mortgage lending landscape changes a lot. Rates and guidelines are in constant flux, and it creates preparedness challenges for buyers that aren't paying in cash. The loan you get today won't always be the loan you get tomorrow. Because of how frequently bank rules are changing, it can be hard for laypersons to distinguish between mortgage fact and fiction of "what's coming next". Recently, we saw this with respect to FHA home loans. January 20, 2010, the FHA issued a press release with new lending guidelines. Specifically, it announced 3 changes that will be effective starting April 5, 2010: Upfront mortgage insurance premiums increase from 1.75% to 2.25% Allowable seller concession reduced from 6% to 3% FICO scores of 580 or lower are subject to a minimum 10% downpayment But, also in its official statement, the FHA announced it would ask Congress for permission to raise monthly mortgage insurance premiums. This is where the rumors started. Nestled on page 348 of the Budget of the United States Government, Fiscal Year 2011, in a section titled Special Topics, there is a 1-paragraph notation that details the FHA's petition. Raise monthly premiums by roughly 0.30%, or $25 per $100,000 borrowed per month Lower upfront mortgage insurance premiums by 1.25%, or $1,250 per $100,000 borrowed at closing For now, the request is neither approved nor acknowledged by Congress. It's merely a request. And in the event that Congress does approves it, that doesn't mean that FHA has to stand by its initial projections. Truth is, about the only thing we know about the future of FHA lending is that, come April 5, 2010, borrowing money is going to be tougher, and mortgage expensive. These are the facts as we know them today. Homebuyers should plan accordingly.

Separating FHA Fact From Fiction : Mortgage Insurance Premiums Posted: 10 Feb 2010 06:45 AM PST The mortgage lending landscape changes a lot. Rates and guidelines are in constant flux, and it creates preparedness challenges for buyers that aren't paying in cash. The loan you get today won't always be the loan you get tomorrow. Because of how frequently bank rules are changing, it can be hard for laypersons to distinguish between mortgage fact and fiction of "what's coming next". Recently, we saw this with respect to FHA home loans. January 20, 2010, the FHA issued a press release with new lending guidelines. Specifically, it announced 3 changes that will be effective starting April 5, 2010: Upfront mortgage insurance premiums increase from 1.75% to 2.25% Allowable seller concession reduced from 6% to 3% FICO scores of 580 or lower are subject to a minimum 10% downpayment But, also in its official statement, the FHA announced it would ask Congress for permission to raise monthly mortgage insurance premiums. This is where the rumors started. Nestled on page 348 of the Budget of the United States Government, Fiscal Year 2011, in a section titled Special Topics, there is a 1-paragraph notation that details the FHA's petition. Raise monthly premiums by roughly 0.30%, or $25 per $100,000 borrowed per month Lower upfront mortgage insurance premiums by 1.25%, or $1,250 per $100,000 borrowed at closing For now, the request is neither approved nor acknowledged by Congress. It's merely a request. And in the event that Congress does approves it, that doesn't mean that FHA has to stand by its initial projections. Truth is, about the only thing we know about the future of FHA lending is that, come April 5, 2010, borrowing money is going to be tougher, and mortgage expensive. These are the facts as we know them today. Homebuyers should plan accordingly.

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Mortgage Approvals Are Getting More And More Scarce Posted: 09 Feb 2010 06:45 AM PST The economy's improving but lending standards are not. Nationally, banks are making mortgage approvals harder to come by. Underwriting guidelines are tightening. The data comes from the Federal Reserve's quarterly survey to its member banks. The Fed asks senior bank loan officers around the country to report on "prime" residential mortgage guidelines over the most recent 3 months and whether they've tightened. For the period October-December 2009: Roughly 1 in 4 banks said guidelines tightened Roughly 3 in 4 banks said guidelines were "basically unchanged" Just 2 of 53 banks said its guidelines had loosened. Combine the Fed's survey with recent underwriting updates from the FHA and generally tougher standards for conventional loans and it's clear that lenders are much more cautious about their loans than they were, say, in 2007. Today's home buyers and would-be refinancers face a bevy of new borrowing hurdles including: Higher minimum FICO scores Larger downpayment requirements for purchases Larger equity positions for refinances Lower debt-to-income ratios So, if you're on the fence about whether now is a good time to buy a home, or make that refi, consider acting sooner rather than later. It doesn't necessarily matter that mortgage rates are low, or that there's an up-to-$8,000 home purchase tax credit for households that qualify. With each passing quarter, fewer and fewer applicants are eligible to take advantage.

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Mortgage Market In Review

 

		MARKET COMMENT Mortgage bond prices rose last week pushing mortgage interest rates slightly lower. Reignited fear of a global economic meltdown sent money into the mortgage bond market in flight to quality buying. The news reports were permeated with worries about European debt payment defaults. Greece and a few other countries were noted as specific concerns. The employment report Friday morning was mixed with unemployment not as bad as expected but a larger than expected drop in payrolls. For the week interest rates fell by about 1/4 of a discount point. The record debt issuance continues with billions of dollars worth of notes and bonds set for auction this week. Strong foreign demand will likely help the entire bond market. With the recent “revisions” to employment data the weekly jobless claims data will carry a bit more weight than usual. Retail sales figures will be the headline figure this week. LOOKING AHEAD Economic Indicator Release Date and Time Consensus Estimate Analysis 3-year Note Auction Tuesday, Feb. 9, 1:00 pm, et None Important. $40 billion of notes will be auctioned. Strong demand may lead to lower mortgage rates. Trade Data Wednesday, Feb. 10, 8:30 am, et $35 billion deficit Important. Affects the value of the dollar. A falling deficit may strengthen the dollar and lead to lower rates. 10-year Note Auction Wednesday, Feb. 10, 1:00 pm, et None Important. $25 billion of notes will be auctioned. Strong demand may lead to lower mortgage rates. Weekly Jobless Claims Thursday, Feb. 11, 8:30 am, et 475k Important. An indication of the employment situation. Higher claims could lead to lower rates. Retail Sales Thursday, Feb. 11, 8:30 am, et Up 0.4% Important. A measure of consumer demand. A smaller than expected increase may lead to lower mortgage rates. Business Inventories Thursday, Feb. 11, 10:00 am, et Up 0.4% Low importance. An indication of stored-up capacity. A significantly larger increase may lead to lower rates. 30-year Bond Auction Thursday, Feb. 11, 1:00 pm, et None Important. $16 billion of bonds will be auctioned. Strong demand may lead to lower mortgage rates. U of Michigan Consumer Sentiment Friday, Feb. 12, 10:00 am, et 74.6 Important. An indication of consumers' willingness to spend. Weakness may lead to lower mortgage rates. EMPLOYMENT REVISION The employment report is one of the biggest, if not the biggest, data releases each month. Last week's employment report came with more twists than usual. Unemployment came in at 9.7%, a sharp drop from the expected 10% mark. Payrolls fell 20,000, weaker than the expected 15,000 increase. This divergence happens from time to time with the data derived from two completely different surveys. One piece of the report that caused major concern was the annual benchmark update, which showed the economy lost 930,000 more jobs than previously estimated in the 12 months ended March 2009. The revised number was very large and basically indicates 2009's employment situation was worse than most thought. A few things that call into question the accuracy of the data influenced this report. Some analysts argued the hiring of temporary census workers threw the figures off. The data was received with a lot of uncertainty and resulted in some wild market swings immediately after the release. The initial reaction sent bond prices lower and interest rates higher. However, the bond market rebounded a bit after digesting the data for an hour or so. This was a prime example of the volatility that often occurs with major data releases.
THE MORTGAGE MARKET IN REVIEW     WEEK OF FEBRUARY 8, 2010

 

What's Ahead For Mortgage Rates This Week

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Posted: 08 Feb 2010 06:45 AM PST Mortgage markets improved last week on domestic jobs data and international banking concerns. The news triggered buying in the bond market and, as a result, conventional, FHA and VA mortgage rates improved for the 4th consecutive week. Mortgage rates are now at a 6-week low but probably shouldn't be. It underscores just how important global events can be to U.S. mortgage markets. For example, corporate earnings continue to improve and key elements of the economy are strengthening. Even the Federal Reserve acknowledges this. In most circumstances, that would be a boon for the stock markets and bond markets would suffer, including mortgage bonds. Last week, that wasn't the case. Early in the week, as (1) China tightened its monetary policy, (2) Greece did little to quell lingering default fears, and (3) Spain raised its deficit forecasts, global investors sought to reduce their collective risk exposure. For safety of principal, many sold some of their more aggressive positions and moved the cash proceeds into the U.S. bond market -- which includes mortgage bonds. On Wall Street, this type of trading pattern is called a "flight-to-quality". Because mortgage bonds are backed by U.S. government entities, the debt is considered to be ultra-safe. Last week's extra demand for bonds helped to push prices up and mortgage rates down. And that was before Friday's weak jobs report. Although the Unemployment Rate fell to 9.7%, the government reported a net loss of 98,000 jobs last month and this, too, helped mortgage rates tick lower. This week, we'll hope for momentum to continue. There's very little domestic news to move rates this week so keep an eye on the global market for similar stories like what we saw last week. Or, if you're not sure what to look for, just give me a call or send me an email and I'll be happy to watch the markets and mortgage rates for you.

 

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Posted By Capital Credit to Mortgage Rates and News Atlanta Georgia at 2/08/2010 09:12:00 AM