Real Estate Update: Expecting the Healthiest Spring Season Since 2007

March 29, 2013 By EmmanuelFonte Leave a Comment

Freddie Mac recently released its U.S. Economic and Housing Market Outlook through March showing that as we head into the spring home buying season, continued low mortgage rates, increasing house prices, and gradually improving consumer confidence will help support increased home sales. A short preview video and the complete March 2013 U.S. Economic and Housing Market Outlook are available here.

Outlook Highlights

• Compared to 2012, expect home sales to be up 8 to 10 percent for 2013.

• Expect housing starts to increase to 950,000 units for 2013, compared to 780,000 in 2012.

• In 2012, real estate added $1.5 trillion to balance sheets, and residential mortgage debt outstanding increased by 0.1 percent in the fourth quarter of 2012, indicating household deleveraging might be drawing to a close.

• Because of sequestration spending reductions, expect the unemployment rate in 2013 to average about 7.8 percent, essentially flat for the year or about 0.25 percentage points higher than it otherwise would have been.

• Regardless, the housing wealth effect is taking hold in the broader market which should translate into the healthiest spring home buying season since 2007.

“History shows us not all economic recoveries are created equal and consumer confidence mirrors this fact,” says Frank Nothaft, Freddie Mac vice president and chief economist.

“With the spring home buying season upon us, the recent highs in the stock market are a welcome signal of better times ahead. But it will be the gradually declining unemployment rate and steadily improving housing market that will deliver broad-based economic benefits for Americans and, in turn, support the overall recovery.”

For more information, visit www.FreddieMac.com

Filed Under: Blog, Economy, Housing Market, real estate financing, Real Estate Investment, Real Estate Updates

3 Financial Reasons to Buy a Home NOW! (Part II)

March 26, 2013 By EmmanuelFonte Leave a Comment

This week, we are going to look at the three financial reasons to buy a home now instead of waiting: prices are rising at an accelerated rate, interest rates are increasing and rents are skyrocketing. – The KCM Crew

Part II – Interest Rates Are Increasing

rates dice A big component in the cost of a home is the mortgage interest rate a purchaser pays. Understanding where rates are headed will help in making a decision whether to buy now or wait.

So, Where Are Rates Headed?

No one can know for sure. The Fed has been artificially holding rates down to stimulate the economy. However, as the economy improves, many experts expect rates to creep up. As an example, HSH Associates, the nation’s largest publisher of mortgage and consumer loan information, recently explained:

“The stronger the economy becomes, the higher rates may grind; the Federal Reserve is keeping them low to goose the economy, but an economy responding to the Fed’s medicine will soon see less of a need for it in order to function. If not otherwise manipulated, higher rates are the natural result of a growing economy, as rising demand for available credit supply and concerns about inflation allow costs to rise.”

The Mortgage Bankers Association (MBA) agrees. They were quoted in HousingWire late last year regarding their thoughts on where rates would be headed in 2013.

“After reaching record lows in 2012, mortgage rates are expected to creep up slowly in 2013, the Mortgage Bankers Association predicted.”

In the MBA’s latest Mortgage Finance Forecast they forecast that the 30 year interest rate will be 4.3% by the end of the year. This represents an increase of almost a full percentage point from the 3.4% rate available at the end of 2012.

For example, we show the impact a one percent increase in rate will have on the monthly principal and interest payment on a $200,000 mortgage.

Freddie Mac’s Weekly Primary Mortgage Market Survey reveals that rates have increased by 2/10ths of a percentage point already this year.

As we mentioned, no one knows for sure where rates will be a year from now. But, many experts think they may be as much as a point higher. With rising residential real estate prices and the possibility of higher mortgage rates, waiting to buy a home makes no sense in our opinion.

Tomorrow, we will look at skyrocketing rents.

by THE KCM CREW

Filed Under: Blog, Economy, Housing Market, Real Estate, real estate financing, Real Estate Investment

3 Financial Reasons to Buy a Home NOW! (Part I)

March 25, 2013 By EmmanuelFonte 1 Comment

This week, we are going to look at the three financial reasons to buy a home now instead of waiting: prices are rising at an accelerated rate, interest rates are increasing and rents are skyrocketing. – The KCM Crew

Part I – Prices Are Rising at an Accelerated Rate

The price of a home is the major consideration when deciding whether or not it makes financial sense to purchase a house. Experts are not only projecting that house values will increase in 2013. They are also more optomistic in the level of appreciation they are projecting as the market begins to heat up. Here are some examples:

The Home Price Expectation Survey

The latest survey of a nationwide panel of 118 economists, real estate experts and investment and market strategists reveals they project home values to end 2013 up an average of 4.6% according to the first quarter. This is after they had projected a 3.1% increase just three months ago.

Bank of America

In a report titled, Someone Say House Party?, Bank of America analysts revised their projections upward:

“Home prices continue to show momentum amid shrinking inventory and record high affordability, prompting us to revise up our original forecast of 4.7% for home prices this year. We now expect national home prices, as defined by the S&P Case Shiller home price index, to increase 8% this year.”

Capital Economics

According to a report in DSNews, Capital Economics also upgraded their prediction:

“Strong demand and tight inventory have brought existing home sales back to ‘normal’ levels, and further gains are possible, according to the latest market report from Capital Economics. Additionally, market conditions may prompt lenders to “loosen the purse strings slightly” and lend a little more freely.

These conditions, combined with broader economic indicators, lead Capital Economics to revise its previous forecast of a 5% price gain this year up to 8%.”

Morgan Stanley

In an article from HousingWire, Morgan Stanley joined the party:

“Strong momentum in home prices as well as housing activity gave Morgan Stanley analysts enough confidence to upgrade their home price appreciation projections to roughly 7% (from 5%) for 2013, according to its latest global securitized credit report…

“The momentum in most metrics of housing activity is running well ahead of the pace we had expected,” said James Egan, Jose Cambronero and Vishwanath Tirupattur, analysts for Morgan Stanley.”

Not only are prices projected to appreciate. Experts are actually revising their projections upward as demand maintains its momentum.

Tomorrow, we will look at increasing interest rates.

by THE KCM CREW

Filed Under: Blog, Economy, Housing Market, real estate financing, Real Estate Investment

Rent or Buy: How they stack up

March 23, 2013 By EmmanuelFonte Leave a Comment

According to Trulia’s 2013 Rent vs. Buy Report, buying is cheaper than renting in the top 100 metro areas across the nation says Forbes. While asking home prices climbed 7.0 percent last year, rent went up by 3.2 percent. Currently, it is 44 percent cheaper to buy versus rent, compared to 46 percent one year ago. Low mortgage rates have contributed to housing affordability. Households can save more dollars buying over renting in the Midwest than in San Francisco, Honolulu, San Jose, and New York, where the savings gap is narrower.

Buying is a great option when these key factors apply:

Low-interest mortgage rates are available;
Households itemize deductions on tax returns, including the mortgage interest and property tax payments for first and second homes;
Households stay in the home three years or longer, because buying and selling a home incurs settlement or closing costs that may be recouped after that period.

Buying is 44 percent lower than renting for families that stay for 7 years, 35 percent for those staying 5 years, and 20 percent for 3-year inhabitants.

The Bipartisan Policy Center forecasts that five to six million new renter households will emerge over the next decade due in part to the low inventory of homes, according to HousingWire. Barry Zigas, Director of Housing Policy for Consumer Federation of America, said that even though young households want to purchase, the current housing supply can’t support that demand. Tighter credit, more substantial down payments, and decreased wealth among new households also contribute to the rise in rentership.

A research study from Florida International University concludes that the U.S. is trending toward becoming a renter nation even though the financial and non-financial benefits of homeownership are still tangible for many households. While buying is a good option for most, it is particularly positive for those who plan on staying in a home for more than three years or who are looking for rental properties to grow their wealth over time.

Filed Under: Blog, Economy, Housing Market, real estate financing, Real Estate Investment

Survey: Americans Dream Big About Home Ownership

March 18, 2013 By EmmanuelFonte Leave a Comment

Eighty-seven percent of Americans recently surveyed say that owning a home is something they dream about, according to a survey by JPMorgan Chase.

“Owning a home is at the heart of most Americans’ dreams,” says Kevin Watters, CEO of mortgage banking at JPMorgan Chase. “And people are saving as much as possible to achieve home ownership.”

Sixty-six percent of Americans surveyed say that they believe home ownership is a good financial investment. Seventy-five percent say it’s a crucial part of raising a family.

First-time home buyers are getting more optimistic about being able to achieve home ownership too. The number of potential first-time home buyers who say they are optimistic about being able to put money down on a home over the next six months doubled in the last six months, compared to previous survey results.

“First-time home buyers are crucial to the housing market and the overall economy—and to their communities,” says Watters. “As families buy their first home, they are investing in their communities and enable other families to move up. That will eventually spur more new construction, generating additional jobs.”

Source: “Survey shows homeownership is still the American Dream,” HousingWire

Filed Under: Blog, Economy, Housing Market, Real Estate Investment, Real Estate Updates

Real Estate: If You Waited to Sell, You May Be Brilliant

March 13, 2013 By EmmanuelFonte Leave a Comment

Many homeowners look back on 2006 house values and wonder why they didn’t sell at the height of the market. They lament the money they may have lost by not selling. However, there is another side to that story. If they did sell back in 2006, they would have still needed to live somewhere.

Looking back at the euphoria that permeated the real estate market at the time, many may have sold and moved into an even nicer, more expensive home. With the benefit of 20/20 hindsight, we can now calculate the financial consequences of such a move.

Let’s look at a house that would have cost $400,000 in 2006. For the sake of this example, we are going to assume that values in this region dropped 25% since. To compute total cost (principal and interest payment) we needed to research mortgage interest rates at the time also.

Here is the comparison:

You saved over $1,100/month on your mortgage payment. Maybe it wasn’t horrible that you didn’t sell in 2006. Perhaps, it was a great decision!

via: KCM

Filed Under: Blog, Economy, Housing Market, real estate financing, Real Estate Investment

How did we rate: January’s housing scorecard

February 28, 2013 By EmmanuelFonte Leave a Comment

January home sales held steady and may indicate that a seller’s market is emerging, reports the National Association of Realtors. Total existing home sales went up 0.4 percent to a seasonally adjusted rate of 4.92 million, up 9.1 percent from the January 2012 level of 4.51 million units. Home prices continue to rise above last year’s levels, and sales are up in all regions except for the West, where inventory is tighter.

Total housing inventory at the end of January dropped 4.9 percent to 1.74 million existing homes on the market, or a 4.2-month supply. This marks the lowest supply rate since April 2005. NAR chief economist Lawrence Yun said that “buyer traffic is continuing to pick up, while seller traffic is holding steady.”

The number of available homes for sale is lower than the six-month supply considered to be typical of a balanced market, reports Forbes. But some experts like Stuart Hoffman, chief economist at PNC Financial Services Group, cautions against using the term “seller’s market” to sum up current housing activity. “I don’t think it is a seller’s market yet but I do think we are getting back to a more balanced market where it’s no longer simply a buyer’s market.” According to Business Insider, Bank of America economist Michelle Meyer sees a market opportunity for new construction and existing homes to add to inventories and offset undue pressure on home prices.

The national median existing-home price for all housing types was $173,600 in January, up 12.3 percent from January 2012, making the 11th consecutive month of year-over-year price increases. Distressed transactions comprised 23 percent of January sales, down from 24 percent in December and 35 percent in January 2012. And the national average commitment rate for a 30-year conventional, fixed-rate mortgage rose slightly to 3.41 percent in January from a record low 3.35 percent in December.

Filed Under: Blog, Economy, Housing Market, real estate financing, Real Estate Investment, Real Estate Updates Tagged With: bellevue homes

Half of all Renters Spend 30% or More Income on Housing

February 27, 2013 By EmmanuelFonte Leave a Comment

Freddie Mac reports that residents of apartment communities that include five or more rental units currently make up 15 million U.S. households — a figure that is expected to climb with shifting demographics and housing preferences.

Such factors as demographic trends, household formations, and higher credit standards for home loans are driving the increase in rental housing, notes Freddie Mac senior vice president of multifamily David Brickman. At the same time, though, affordable rental housing is becoming more elusive in certain parts of the country because of gross rent, or rent plus resident-paid utilities.

More than half of all people who rent spend more than 30 percent of their income on housing — an increase from 40 percent in 2000. Low-income households tend to spend even larger portions of their incomes on rent, based on the U.S. Census Bureau’s American Community Survey 2000-2011.

Brickman asserts that Freddie Mac remains dedicated to supporting affordable rental housing. He concludes, “Working closely with multifamily property owner/borrowers and our network of lenders, Freddie Mac Multifamily structures financings in a way that lets us offer very competitive, long-term rates.

Source: “Freddie Mac: Multifamily Affordability Is Now a Key Focus,” Housing Wire

Filed Under: Blog, Housing Market, Real Estate Investment Tagged With: renting

10 Best Warren Buffet Quotes

February 22, 2013 By EmmanuelFonte Leave a Comment

source: moneystreet

Filed Under: Blog, Random Thoughts, Real Estate Investment Tagged With: warren buffet