Feb 3, 2014 | Mortgage Rates
Last week brought mixed news; while the Department of Commerce reported a dip in new home sales, mortgage rates also fell. The Federal Reserve’s FOMC statement revealed that quantitative easing would be further reduced by an additional $10 billion monthly.
New Home Sales: Y-O-Y Reading Best Since 2008
December’s reading of 414,000 for new home sales fell short of November’s revised reading of 445,000 new homes sold as well as expected sales of $455,000. The consensus figure was based on November’s original sales reading of 464,000 new homes sold.
The inventory of new homes available rose from last month’s level of 4.70 month supply to a 5 month supply in December. Cold weather was cited as a cause of lower new home sales.
New home sales increased by 4.50 percent year-over-year; this was the highest reading since 2008. The median price of a new home rose by 0.60 percent in December to $270,299.
The national median home price was $265,800 in 2013, an annual growth rate of 8.40 percent and the highest annual growth rate for median home prices since 2005.
Economists cited rising mortgage rates, new mortgage rules and a lagging labor market as signs that slower home sales could be expected in 2014.
Pending home sales echoed the slowing trend in home sales; the index reading fell by -8.70 percent to a reading of 92.4 in December.
All Four Regions Reported A Drop In Pending Sales As Compared To November:
Northeast -10.30 percent
West -9.80 percent
South -8.80 percent
Midwest -6.80 percent
This was the lowest reading for pending home sales since October 2011.
Case-Shiller: Home Prices Up 13.7%
The Case-Shiller 10 and 20 city home price indices for November reported a 13.70 percent gain in home prices year-over-year. This was the fastest annual growth rate in home prices since 2006. Further evidence of slower growth in home prices was evident as nine of 20 cities tracked reported lower home prices.
Fed Continues Stimulus Reduction
Wednesday’s FOMC statement confirmed expectations that the Fed would continue tapering its monthly asset purchases made under its quantitative easing program.
Monthly purchases of mortgage-backed securities and Treasury securities will be reduced from January’s level of $75 billion to $65 billion in February. Economists expected this reduction to occur.
Freddie Mac’s Primary Market Survey reported lower average mortgage rates. The rate for a 30-year fixed rate mortgage fell by 7 basis points to 4.32 percent with discount points unchanged at 0.7 percent.
15-year mortgage rates also fell to 3.40 percent with discount points lower at 0.60 percent. The average rate for a 5/1 adjustable rate mortgage fell by 3 basis points to 3.12 percent with discount points unchanged at 0.50 percent.
This was welcome news as homebuyers and mortgage lenders have felt the effects of higher home prices and new mortgage rules that became effective January 10.
New Jobless Claims Higher
Weekly jobless claims jumped to 348,000 from the prior week’s 339,000 new jobless claims. This was the highest level of new jobless claims in six weeks. Reasons for increased claims were unclear, but were possibly caused by lingering influences of the holiday season or a sinking labor market.
Consumer confidence rose in January to a reading of 80.7 as compared to December’s reading of 77.5 as compared to January 2012’s reading of 58.4.
This Week
This week’s scheduled economic and housing news includes construction spending, non-farm payrolls and the national unemployment rate. Freddie Mac’s PMMS report and weekly jobless claims will be released as usual on Thursday.
Jan 31, 2014 | Around The Home
Everyone wants their pipes to last as long as possible, but there are a couple of simple problems that might be sucking the life out of your plumbing. Long-term stress is the enemy when it comes to your water system.
The three most common enemies are high water pressure, mineral-laden hard water, and grease. Avoid these three mistakes, and your water system will last years longer.
Take The Pressure Off Your Pipes
You might enjoy high water pressure when you’re taking a shower, but your pipes aren’t enjoying it at all. Over time, this high pressure stresses your plumbing system and can lead to leaks.
Is your high-pressure shower worth an expensive plumbing leak? To test your water pressure, you’ll have to hire a professional. Proper pressure should be somewhere between forty and eighty pounds per square inch.
To have a plumber reduce your water pressure should cost no more than about three or four hundred dollars. That sounds expensive, but it’s a lot cheaper than a leak.
Soft Water Is Good Water
If your water has a lot of minerals dissolved it, then it’s known as hard water. If you don’t already have a water softener you should consider it, because over time, those minerals will build up in your plumbing.
Eventually this will lead to a leak, so nip the problem in the bud, and look into getting a water softener. A good water softener should cost around five hundred dollars.
Hard water also makes soaps and detergents less effective. Soft water will get your clothes, your dishes, and even your hair cleaner.
Cease The Grease
Don’t ever pour cooking grease down the drain. It might be liquid when you pour it, but after a while, it will cool and solidify in your pipes. This won’t break the plumbing and cause a leak, but it will clog it all up.
The water that goes down afterward won’t do anything to wash away the sticky grease. You don’t want your pipes backing up, trust me. That is one messy problem.
Instead pour your grease into containers and throw it away in the garbage. Even better, go ahead and save it in the pantry and cook with it later.
Indoor plumbing is one of the most convenient technologies we have. So don’t take it for granted. Take care of your plumbing, and get the most out of it.
Avoid excessive water pressure, get a water softener, and don’t pour any grease down the drain. A little care now will go a long way. No one wants to deal with a plumbing leak. They’re expensive and a huge hassle.
Jan 30, 2014 | Housing Analysis
According to the S&P/Case-Shiller 10 and 20-City Home Price Indices released Tuesday, the U.S. Housing Market is on a roll based on year-over-year increases in average home values, but month-to-month results were mixed.
The 10 and 20-City Home Price Indices showed year-over-year growth of 13.80 and 13.70 percent respectively.
Highlights Include:
- Dallas, Texas posted its highest rate of annual growth since 2000.
- Chicago’s average home price rose by 11.00 percent, its highest annual gain since December 1988.
- The 10 and 20-City Indices posted their best November home prices since 2005.
Top year-over-year gains in home prices included Las Vegas, Nevada at 27.30 percent, San Francisco, California at 23.20 percent, Los Angeles, California at 21.60 percent and San Diego, California at 18.70 percent. Atlanta, Georgia rounds out the top five cities with a year-over-year increase in home prices of 18.50 percent.
The annual readings for the S&P/Case-Shiller 10 and 20-City Housing Market Indices in November suggests that U.S. markets are strong enough to sustain momentum in spite of rising mortgage rates. The month-to-month results show that both indices decreased by an incremental 0.10 percent in November, 2013.
Keeping in mind the traditional slump in home sales during the winter and holiday season, lower month-to-month readings were neither unexpected nor disappointing.
Eight of the nine top cities posting the highest month-to-month growth in home prices were located in the Sun Belt. San Diego, California and Minneapolis, Minnesota home prices remained nearly flat after decreasing in October.
Nine of the 20 cities surveyed posted positive month-to-month growth in home prices. Of the nine cities, only Boston, Massachusetts and Cleveland, Ohio were not located in the Sun Belt.
S&P/ Dow Jones Index Committee Chairman Expects Slower Growth In 2014
David Blitzer, Chairman of the Index Committee at S&P Dow Jones Indices, noted that November’s month-to-month readings for the 10 and 20-city home price indices indicated that Phoenix, Arizona, Los Angeles California and Las Vegas, Nevada had each posted 20 or more consecutive months of rising home prices.
While positive in his remarks about increasing home prices, Mr. Blitzer also noted that indicators suggested a slower rate of growth during 2014.
This aligns with previously released economic news citing uncertainty about mortgage rates that may continue to rise as the Federal Reserve continues tapering its monthly asset purchases under its quantitative easing program.
The Fed’s FOMC meeting is scheduled to end Wednesday, January 29, at which time the committee’s customary statement will indicate whether or not the Fed’s monthly asset purchases will be reduced from their current level of $75 billion.
On the positive side, Chairman Blitzer said that the low inflation rate (1.50 percent in 2013) and rising home prices are helping homeowners accumulate home equity at a faster pace.
Jan 29, 2014 | Uncategorized
Earlier this month the Consumer Financial Protection Bureau updated the real estate
settlement cost booklet “Shopping for yor home loan”. The booklet was which originally prepared by the U.S. Department of Housing and Urban Development (HUD).
According to the CFPB, certain changes were made to reflect new mortgage rules under the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act).
The booklet includes information about title services and title insurance. The it tells consumers that a lender’s policy only protects the lender’s interest. But it also informs consumers that “If you want to protect yourself from claims by others against your new home, you will also need an owner’s title insurance policy.” This is no change to the description of what HUD previously said in the booklet about owner’s title insurance.
The CFPB plans a larger update of the booklet, which will reflect the integrated mortgage disclosures under the Truth in Lending Act and the Real Estate Settlement Procedures Act and other changes under the Dodd-Frank Act. The changes are consistent with other CFPB resources and tools for consumers as part of the CFPB’s broader mission to educate consumers. View and download the booklet here.
Jan 29, 2014 | Home Seller Tips
As a society, it seems like we’ve gotten away from appreciating our homes for their emotional and sentimental worth. Instead, we focus solely on their monetary value.
An Appraiser Can Estimate A Home’s Monetary Value, But To Gain A True Concept Of Your Home’s Worth, You Must Also Take Into Consideration:
- Pride Of Ownership. You don’t buy a pair of Prada shoes because you’re going to be able to resell them and make a profit. You buy them because they make you look good and feel good.
- Security And Stability.Your home provides a roof over your head that’s in your control. You can decorate it how you want. You don’t have to worry about a landlord selling the property or asking you to move out. In the “olden days” (or should I say “golden days”), we called our homes our castles because, as owners, we felt like the kings and queens of our homes. You can still feel that way! Claim your castle and crown yourself king or queen today.
- A Safe Haven.After a tough day at work or a day of disappointments, where’s the first place you think of going? Home! As Dorothy says, “There’s no place like home.”
- A Place To Make Memories. Your son’s tree house and daughter’s playhouse. The markings on the wall that tracked your children’s growth. The porch swing where you start and end every anniversary celebration.
- A Neighborhood Full Of Friends. In the event of an emergency, your neighbors are your first line of defense. They’re also the simplest, best and least expensive form of security. Additionally, they may have the exact tool you need for a project; the extra pair of hands you need to complete a project or children to become playmates with yours. Neighbors also give you that much needed in-person, up-close social network.
Even if your home’s economic value has dropped, you continue to benefit from its emotional values of community, stability, security and success.
Thinking of buying a home? I can help you evaluate the emotional and monetary worth of homes and find a home that fits your values and lifestyle. Give your trusted real estate professional a call today.
