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  • President Trump Addresses Realtors, Touts Plans Affecting Real Estate Industry
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    Alex Wong/Getty ImagesPresident Donald Trump wants to make real estate great again. The former real estate developer touted his plans affecting the real estate industry before nearly 2,000 cheering agents on Friday at the National Association of Realtors® midyear meeting in Washington, DC. During his roughly hourlong address, Trump blasted environmental and other government regulations that impede building; praised his administration’s opportunity zones, which encourage investment in struggling communities; and championed  plans to overhaul the nation’s housing finance system. Realtors sporadically jumped out of their seats to applaud enthusiastically. Standing in front of a blue backdrop lined with 16 American flags, and facing an audience dotted with at least half-dozen red “Make America Great” caps, he also praised the strong economy and took a few jabs at California and his political foes, including environmentalists. Trump talked about the trouble he had building on about 213 acres he owned in and around Bedford, NY, more than an hour north of New York City. “You’d have a puddle on your land and they’d consider it one of the great lakes of the world,” the president said. “The environmental stuff was getting tough. It’s getting worse and worse every year.” His administration plans to roll back… Read more »
  • Home Building in the U.S. Rose in April
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    Daniel Acker/Bloomberg via Getty ImagesWASHINGTON—A gauge of home building across the U.S. increased in April, driven by an uptick in single-family construction across much of the country. So-called housing starts rose 5.7% in April from the prior month to a seasonally adjusted annual rate of 1.235 million, the Commerce Department said Thursday. Residential building permits, which can signal how much construction is in the pipeline, climbed 0.6% from March to an annual pace of 1.296 million in April, the first monthly increase since December. Economists polled by The Wall Street Journal had expected a 5.4% gain for starts and a 1.7% increase for permits last month. Building projects for homes made for one family rose in each region of the U.S. but the South. Meanwhile, building in the Northeast increased at the fastest pace in nearly two years. Overall construction rose for single-family homes and apartment properties. Permits for single-family homes, however, declined. Building project approvals rose for apartment building. Building projects for single families have held near the highest levels since before the most recent recession, while multifamily construction eased because of a glut of apartment properties in some parts of the country. Housing-starts data are volatile from month… Read more »
  • Rising Rents for Millennials Give Rise to a New Breed of Lender
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    Morgan Lieberman for The Wall Street JournalJennifer Burnes says the paychecks from her work as a model and designer in Hollywood arrive sporadically, posing a challenge to paying monthly rent. “You know the check’s on the way, you just don’t know when, exactly,” the 22-year-old said. That is why she turned to StayTony. The property manager has teamed up with Uplift, one of several startups offering loans to recent college graduates, professionals moving to a new city and others who want to build credit or could use assistance making rent payments. These companies, which also include Domuso and Till, are entering a market long associated with payday lenders. Compared with cash-advance loans, which come with annual interest rates as high as 700% in some states, funds from the rent-lending startups are available at much lower cost. Some are competitive with credit-card borrowing rates at less than 20%. That is a big help for those who rely on irregular paychecks or can’t come up with large move-in deposits. The pitfall to such credit is that the loans might encourage some young renters to live beyond their means. Large cities often have a high cost of living that can push residents ever deeper… Read more »
  • Major Flooding in the South Is a Cautionary Tale for All Homeowners
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    Sean Rayford/Getty ImagesTorrential rains over the past week have pummeled a wide swathe of the South from eastern Texas to Mississippi — and residents in some areas will face the threat of flooding for weeks to come. More than a foot of rain has fallen in the South in recent days, thanks to a series of severe thunderstorms. Over Mother’s Day weekend, the downpours led to flash flooding everywhere from Houston and New Orleans to Baton Rouge, La., and parts of South Mississippi. High winds and hail added to the damage many homeowners and renters face. Even though dry weather is now in the forecast for most of this week, the threat of continued flooding remains. More storms are forecast for the weekend, and rainfall further north could also pose a problem for those who live along the Gulf Coast. “River flooding may continue into June as floodwaters in rivers farther north travel southward and add onto the ongoing flooding along the lower Mississippi River,” AccuWeather Meteorologist Brett Rathbun said Monday. Flooding has been an issue for the entire length of the Mississippi River from the Iowa-Illinois border to New Orleans. Other rivers including the Missouri River and the Wabash River have also… Read more »
  • Fannie and Freddie Back More Mortgages of Those Deeply in Debt
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    T.J. Kirkpatrick for The Wall Street JournalThe gatekeepers of the American mortgage market are increasingly backing loans to borrowers who have heavy debt loads, highlighting questions about mortgage risk as policy makers debate ways to change the system. Almost 30% of loans that mortgage giants Fannie Mae and Freddie Mac packaged into bonds last year went to home buyers whose total debt payments amounted to more than 43% of their incomes, according to an analysis by industry research group Inside Mortgage Finance. The share has nearly doubled since 2015. Data on other government mortgage programs also show an increase. The backing of these loans opens up a debate about the government’s role in the housing market. Some say cheap, federally backed financing has made credit available for millions of borrowers who otherwise might not have had a shot at homeownership. Others say that more-indebted borrowers are riskier, and that their purchases may be accentuating a rise in home prices that in many areas has outstripped median incomes. Those contrasting views are spilling into the open as policy makers once again try to overhaul the housing-finance system. Mark Calabria, the recently confirmed head of the Federal Housing Finance Agency, which oversees Fannie and Freddie, said he plans to prioritize addressing… Read more »
  • Small Mortgages Are Getting Harder to Come By
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    Whitney Curtis for The Wall Street JournalSome low- and middle-income home buyers are having a hard time getting mortgages for an unexpected reason: The loans they’re applying for are too small. Lenders extended about 106,000 mortgages with balances between $10,000 and $70,000 in the U.S. last year, worth $5.1 billion. That is down 38% from almost 171,000 in 2009, according to figures compiled by Attom Data Solutions, a real-estate data firm. The drop-off at the bottom end of the market has been far swifter than at the top. Origination was down a more modest 26% for mortgages between $70,000 and $150,000, and it rose 65% for mortgages above that range. Only about a quarter of homes that sold for less than $70,000 were financed with a mortgage, while almost 80% of sales between $70,000 and $150,000 had one, according to an Urban Institute analysis last year. Low-end borrowers had their applications denied at a higher rate than those taking out bigger mortgages even when comparing borrowers with similar credit quality, according to the think tank. Housing experts say small mortgages have become rarer because lenders have trouble making profits on smaller loans. Lenders typically have a fixed cost to extend a mortgage,… Read more »
  • Mortgage Rates Slump for the Third Straight Week as Big Questions Dog the Housing Market
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    Joe Raedle/Getty ImagesRates for home loans fell along with the broader bond market even as the transformation of the real-estate industry quickened pace. The 30-year fixed-rate mortgage averaged 4.10% in the May 9 week, Freddie Mac said Thursday. That was down 4 basis points during the week. The 15-year fixed-rate mortgage averaged 3.57%, down from 3.60%. The 5-year Treasury-indexed hybrid adjustable-rate mortgage averaged 3.63%, down 5 basis points. The 30-year-fixed follows the benchmark 10-year Treasury note. Thanks to concerns about the economy and choppy markets, investors have been piling into bonds this year. Bond yields fall as prices rise. The popular mortgage product has managed a weekly gain only six times so far this year, and just last week Freddie’s chief economist slashed his 2019 forecast for rates. Meanwhile, as the spring season hits its peak, buyer demand has been “going gangbusters” for Rich Harty, a real estate agent in Chicagoland. Mortgage rates have been “cooperative,” and a boon for the buyers Harty works with. “I had a record year in 2018, and 2019 is shaping up to be even better,” Harty told MarketWatch. But real estate is hyperlocal, it seems: some communities adjacent to where he works aren’t doing as well,… Read more »
  • Homeowners Fault Government for Hurricane Harvey Damage
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    Loren Elliott for The Wall Street JournalKATY, Texas—With lush parks, solid schools nearby and its proximity to Houston, the Cinco Ranch planned community seemed the perfect place for Elisio and Ana Soares to buy a house after moving to the U.S. from Brazil. But only after Hurricane Harvey swamped their dream home in August 2017 with 7 inches of water did the couple learn something they say they were never told during 18 years there. Their home was built on the edge of a dry reservoir the U.S. Army Corps of Engineers designed to hold water during severe storms to protect downtown Houston from flooding. Thousands of residents in sprawling subdivisions west of Houston don’t just blame the historic rainfall for the losses they incurred during Harvey. They also fault the federal government. A trial starting Monday will test the legal claims of these residents and business owners who allege the U.S. Army Corps of Engineers knew homes were at risk of flooding and now, under eminent domain law, owes them compensation. “How come nobody ever told us?” said Mr. Soares, whose home incurred roughly $100,000 in damage from Harvey. “Nothing from the government or anybody saying ‘Hey, beware, you… Read more »
  • Ginnie Mae Moves to Crack Down on Repeated Refinancings
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    istock/wichayada suwanachunGinnie Mae is taking steps to curb repeated mortgage refinancings that it says are hurting both borrowers and investors. The government-backed firm, which promotes homeownership by guaranteeing government mortgage bonds, is considering barring some loans backed by the Department of Veterans Affairs from inclusion in its flagship bonds. Its proposal, to be released on Friday, is aimed at stopping so-called “churning,” a practice in which lenders push borrowers to refinance their home loans over and over in a bid to boost fees to the lenders. Ginnie Mae has made churning a priority in recent years. It started taking action against individual lenders last year when their activity suggested they were pushing refis on borrowers, even when the borrowers wouldn’t benefit from it. Ginnie Mae’s backing of government mortgage bonds gives investors certainty they will be paid, which in turn allows lenders to make mortgages at lower rates, often to first-time home buyers and veterans. Its portfolio of outstanding bonds has ballooned in recent years and now makes up nearly a third of all agency-backed mortgage debt. That has put the firm in the position of having to more carefully police the actions of its lenders, many of which are independent firms, to… Read more »
  • Mortgage Rates Tumble as One Economist Waves the White Flag
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    iStockRates for home loans slumped, another reminder of the “lower for longer” conditions that have dogged financial markets since the 2008 financial crisis. The 30-year fixed-rate mortgage averaged 4.14% in the May 2 week, Freddie Mac said Thursday. That was down 6 basis points during the week. It snapped a four-week streak of increases for the popular product, the first time it had sustained such a long stretch of gains since last September. The 15-year fixed-rate mortgage averaged 3.60%, down from 3.64%. The 5-year Treasury-indexed hybrid adjustable-rate mortgage averaged 3.68%, down 9 basis points. Those rates don’t include fees associated with obtaining mortgage loans. Fixed-rate mortgages follow the trajectory of the benchmark 10-year U.S. Treasury note. The yield on it and other bonds swooned earlier in the year after the Federal Reserve surprised investors by saying that the case for interest-rate increases had “weakened” because of soft inflation, slower growth, and policy uncertainty. Then government bonds slid again in March, as fears about slow global growth pushed investors into safe havens. Bond yields fall as price rise. Freddie Mac’s chief economist, Sam Khater, was a willing participant in MarketWatch’s year-ahead predictions for mortgage rates published last December. Like many analysts, Khater fully expected… Read more »
  • Pending Home Sales Skyrocket in March, Signalling a Spring Rebound for Housing
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    Photographer: Matthew Staver/Bloomberg via Getty ImagesThe numbers: An index of pending-home sales surged 3.8% in March, the National Association of Realtors said Tuesday. Economists surveyed by Econoday had forecast a 0.7% monthly increase. What happened: The pending-home sales index, which tracks home-contract signings, has been volatile over the past few months, but the trend for housing has generally been down. March marked the 15th straight month of yearly declines for the pending sales index, which fell 1.2% over the last 12 months. Also on Tuesday, the widely-followed Case-Shiller index showed home prices had risen at the slowest pace since mid-2012 in February. In March, only the Northeast region saw a decline, of 1.7%. Pending home sales were up 4.4% in the South, 2.3% in the Midwest, and a convincing 8.7% in the West, an area dogged by higher prices and stung by recent tax law changes. Big picture: Contract signings usually precede closings by about 45 days, so the pending home-sales index is a leading indicator for upcoming existing-home sales reports. The Realtors expect sales of existing homes to be 1.1% lower in 2019 than last year. All eyes are on the busy spring selling season to see if things turn around. What they’re saying: “There is a pent-up demand in… Read more »
  • Home-Price Growth Slows to Lowest Level Since 2012
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    Matthew Staver/Bloomberg via Getty ImagesHome-price growth slowed to its lowest level in nearly seven years in February, a clear sign that the housing market is moderating heading into spring. The S&P CoreLogic Case-Shiller National Home Price Index, which measures average home prices in major metropolitan areas across the nation, rose 4% in the year ending in February, down from 4.2% the prior month. Home-price growth has been slowing for nearly a year, welcome news for first-time buyers who have been struggling to get into the market. Thus far, however, the easing in price growth has yet to translate into the stronger sales that real-estate agents and economists had hoped for. Real-estate agents say demand for buyers this spring has been strong thanks to more moderate prices and lower mortgage rates. Nonetheless, existing home sales fell nearly 5% in March. The Case-Shiller 10-city index gained 2.6% over the year ending in February, down sharply from a 3.1% annual change in January. The 20-city index gained 3%, also a significant slowdown from an annual gain of 3.5% in January. Economists surveyed by The Wall Street Journal expected the 20-city index to gain 2.8%. Once-hot housing markets on the West Coast, such as Seattle and San… Read more »
  • Mortgage Rates Climb for Fourth Straight Week as Easy Money Crackdown Begins
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    Ty Wright/Bloomberg via Getty ImagesRates for home loans ticked up slightly, a reminder that the easy-money era for mortgages will likely have to end at some point. The 30-year fixed-rate mortgage averaged 4.20% during the April 25 week, Freddie Mac said Thursday. That was up three basis points during the week and marked the fourth straight weekly rise for the popular product. The 15-year fixed-rate mortgage averaged 3.64%, up from 3.62%. The 5-year Treasury-indexed hybrid adjustable-rate mortgage averaged 3.77%, down one basis point. Those rates don’t include fees associated with obtaining mortgage loans. Fixed-rate mortgages follow the benchmark 10-year U.S. Treasury note, which has risen over the past few weeks. A raft of strong economic data has convinced investors that the sluggishness in the economy at the beginning of the year was temporary, and that the economic expansion still has legs. That’s made assets like stocks more attractive, and fixed-income investments, like bonds, less so. In the housing market, meanwhile, conditions remain tight. In March, supply of previously-owned homes declined and sat well below the long-time average. The specter of rising rates has prompted more Americans to apply for a mortgage:applications hit a nine-year high in recent weeks, according to the Mortgage Bankers Association. But lending… Read more »
  • Fannie and Freddie’s Uncertain Future, Explained
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    Heather Seidel/The Wall Street JournalFannie Mae and Freddie Mac are the heart of the U.S. housing system. They’re also a topic of intense debate. The Trump administration recently asked for plans to overhaul Fannie and Freddie. It also installed a new official to oversee the two companies, and he says he wants to put them on the road toward returning to private hands. Yet lawmakers have spent the last decade arguing about how big they should be and how much the government should be involved in their operations. Some have said they shouldn’t exist at all. So what’s the hangup? Fannie and Freddie make mortgages more readily available and more affordable. The 30-year, fixed-rate mortgage essentially owes its existence to them. But some argue that the private market could fill this role more efficiently. Right now, there isn’t much agreement on either side of the aisle on how to change the government’s involvement in mortgages or what the market would look like without the two companies. The government created Fannie in response to the Great Depression to encourage banks to make more home loans. Fannie and Freddie buy mortgages from banks, alleviating some of the risk that lenders have to take on. Almost half of mortgages made today are… Read more »
  • 2019’s Housing Market Is Likely to Be Stronger Than We Thought—Here’s Why
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    jandrielombard/iStockDespite a real estate slowdown gripping the nation, this year’s housing market is expected to be busier than realtor.com® economists originally predicted late last year. That means more home sales—and higher prices—are on the way. The anticipated uptick in activity is due to lower mortgage rates, which make homes more affordable for buyers. The economic team expected rates to climb to 5.5% in 2019, but instead they have hovered around 4%. (They were 4.17% on 30-year, fixed-rate mortgages as of April 18, according to Freddie Mac data.) Economists say rates are now likely to rise a little to 4.5%, still well below what buyers were dreading. However, it’ll be nothing like the feeding frenzy of recent years. “It’s still going to be a lukewarm year for the housing market,” says Chief Economist Danielle Hale of realtor.com. “We’re going to see higher prices and slightly higher home sales than we expected. But home sales are still going to decline slightly as a result of the housing slowdown. There’s a gap between what sellers are looking for and buyers are hoping to pay.” While a single percentage point difference may not seem that significant, it can add more than $100 to the monthly loan payment on… Read more »
  • U.S. New Home Sales Rose in March
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    George Frey/Bloomberg via Getty ImagesWASHINGTON—Purchases of new homes in the U.S. increased in March, driven by sales gains in most parts of the nation. Purchases of newly built single-family homes—a relatively narrow slice of all U.S. home sales—rose 4.5% to a seasonally adjusted annual rate of 692,000 in March, the Commerce Department said Tuesday. Economists surveyed by The Wall Street Journal had expected a 2.5% decline. Sales were up 3.0% in March from the prior year. The pace of new-home sales remains well below the elevated levels seen before the 2007-09 financial crisis and recession. All U.S. regions but the Northeast saw new-home sales gains last month, with purchases in the South reaching the highest level in more than a decade. In the broader housing market, inventory has been tight, driving a run-up in home prices and keeping some potential buyers out of the market. Meantime, construction-labor shortages and rising input costs are pushing up the overall cost of buying new homes, though prices fell last month. The months’ supply of new homes for sale on the market was 6.0 in March, up from 5.3 a year ago. With more homes on the market, the median sales price of a new… Read more »
  • Existing-Home Sales Slide Nearly 5% in March as the On-Again-Off-Again Housing Market Retreats
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    Joe Raedle/Getty ImagesThe numbers: Existing-home sales ran at a seasonally adjusted annual 5.21 million rate in March, the National Association of Realtors said Monday. That was 4.9% lower than February’s pace and missed the Econoday consensus of a 5.3 million rate. What happened: Sales of previously-owned homes fell more sharply than expected in March as the usual housing headwinds stalked the market. The surge in February was the strongest in nearly four years, and the Realtor lobby group is attributing the March decline to a return to normalcy after that spike. Still, sales were 5.4% lower than a year ago. The median price of a home sold in March was $259,400, a 3.8% increase versus a year ago. At the current pace of sales, it would take 3.9 months to exhaust available supply, still well below the long-time average of 6 months. Properties stayed on the market for an average of 36 days in March, down from 44 days in February but a bit longer than the 30 days averaged last year. According to NAR’s measure of first-time buyers, they accounted for 33% of all transactions in March. But more recent comprehensive research – NAR’s is based on survey data – suggests first-time buyers… Read more »
  • Housing Starts Lurch to a Near 2-Year Low
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    sculpies/iStockThe numbers: Housing starts were at a 1.14 million seasonally adjusted annual rate in March, the Commerce Department said Friday, 0.3% lower compared to February. It missed the MarketWatch consensus of a 1.225 million seasonally adjusted annual rate and was the lowest since May 2017. Permits fell 1.7% to a rate of 1.27 million. Economists expected a 1.3 million rate on permits. What happened: Builders broke ground on about the same number of homes in March as in February, but the pace of construction is running well below last year’s. The March tally was a whopping 14.2% lower than a year ago. Revisions to prior months were roughly flat. The government’s data on new home construction are notoriously unreliable, making it hard to rely on any one report for a big-picture view. Still, for the year to date, starts are down 9.7% compared to the same period last year. Big picture: New construction has been anything but a shot in the arm for a supply-starved housing market. Homebuilders are wary of overbuilding, like in the last cycle, and also constrained by more difficult conditions. Labor is hard to find, and policies, like trade war tariffs, are making materials more costly. It’s always been more… Read more »
  • Mortgages? Big Banks May Be Throwing In the Towel
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    RKO Pictures via Getty ImagesYou can kiss George Bailey’s mortgage market goodbye. As the small-town banker in Frank Capra’s “It’s a Wonderful Life,” Bailey epitomized an old-fashioned world in which bankers know every borrower personally. In the mortgage market of 2019, borrowers can do just about everything online, never meeting the lender behind the process. And as comments from executives of America’s biggest banks made clear last week, that person – or institution – making the loan is increasingly less likely to be a banker. In an earnings report last week, JPMorgan Chase said that mortgage originations were down 18% compared to a year ago in the first quarter. For Wells Fargo , which reported earnings the same day, mortgage lending was down 23% compared to the year earlier. (Wells Fargo is still the largest originator of mortgages in the U.S., with a 10.7% market share in 2018, according to Inside Mortgage Finance.) Jamie Dimon, JPM’s CEO, said this in his shareholder letter released at the same time as Q1 earnings: “In the early 2000s, bad mortgage laws helped create the Great Recession of 2008. Today, bad mortgage rules are hindering the healthy growth of the U.S. economy. Because there are so many regulators… Read more »
  • Rent Is Accelerating Again. What Can Be Done?
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    Ty Wright/Bloomberg via Getty ImagesRental price growth, which took a brief breather this winter, is surging higher again, adding fresh urgency to policymakers’ considerations of how to address a worsening affordability crisis. In March, the cost of rent was 3.7% higher than last year, the Labor Department reported Wednesday. That’s the strongest annual growth since April, and a tick higher than the full-year average of 3.6% yearly gains throughout 2018. What’s more, it’s still growing faster than wages, as average hourly wages grew 3.2% over the same time period. In the aftermath of the recession, rental costs were subdued. But then household formation began to accelerate as the economy healed – but the housing industry didn’t. The U.S. now has a deficit of about 2.6 million housing units affordable to low- and moderate-income Americans, according to the Joint Center for Housing Studies at Harvard University. That roughly matches a Freddie Mac analysis that found an overall shortfall of about 2.5 million housing units. In 2010, the first full year after the recession ended, rents grew, on average, barely at all, compared to the year before. By 2016, rental price growth was 3.8% compared to the year before. Growth in rents subsided a bit over… Read more »
  • Mortgage Rates Tick Up as the Spring Selling Season Hangs in the Balance
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    Jonathan Alcorn/Bloomberg via Getty ImagesRates for home loans edged up after reports showed the economy was shrugging off its winter sluggishness. The 30-year fixed-rate mortgage averaged 4.12% during the April 11 week, mortgage guarantor Freddie Mac reported Thursday. That was up from 4.08%, and marked the first time in seven months that the popular product had managed two weekly gains in a row. The 15-year fixed-rate mortgage averaged 3.60%, up four basis points. The 5-year Treasury-indexed hybrid adjustable-rate mortgage averaged 3.80%, up from 3.66%. Those rates don’t include fees associated with obtaining mortgage loans. Fixed-rate mortgages follow the trajectory of the 10-year U.S. Treasury note. Bond yields are stabilizing as economic data improves and investors pivot back to less-safe assets, like stocks. There are clear signals that Americans have become increasingly sensitive to rates: applications for mortgages fell 5% in the past week, the Mortgage Bankers Association said Wednesday, continuing a pattern of rates and applications moving in lockstep. Still, even with the recent move up, the 30-year-fixed is nearly half a percentage point lower than its full-year average in 2018. And mortgage rates aren’t the only thing holding back the housing market. The spring selling season is in full bloom across most… Read more »
  • Forget Everything You’ve Heard About First-Time Homebuyers. They’re Doing All Right.
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    Daniel Acker/Bloomberg via Getty ImagesHow many first-time homebuyers are there in the housing market? That’s an important question. A smaller share of first-timers suggests that the market may be too competitive or too expensive – and ultimately not very inclusive. A bigger share suggests market conditions may be a bit easier, and that more Americans are getting a shot at attaining upward mobility. But it is surprisingly difficult to pin down exactly how many home purchases go to first-timers, and a new set of research reports from the New York Fed attempts to correct that. The National Association of Realtors, the trade group that’s responsible for what may be the best-known measurements of the issue, publishes an annual survey of characteristics of home buyers and sellers. NAR conducts that survey on a monthly basis and those results are tracked in their existing-home sales release. Another measure comes from the mortgage industry. Within the mounds of paperwork any borrower must fill out, there’s one form known as the Uniform Residential Loan Application. It asks whether the borrower has had “an ownership interest in a property in the last three years.” The inclusion of that question in the application process dates back to 1992, when Congress passed… Read more »
  • Mortgage Rates Hold Near 14-Month Lows as Application Demand Revs Up
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    iStockRates for home loans were little changed near recent lows as investors struggled to make sense of competing economic narratives, offering some breathing room to house hunters. The 30-year fixed-rate mortgage averaged 4.08% during the April 4 week, mortgage guarantor Freddie Mac reported Thursday. That was up two basis points, and marked only the third time this year that the popular mortgage product has charted a weekly rise. The 15-year fixed-rate mortgage averaged 3.56%, down one basis point. The 5-year Treasury-indexed 3.66%, down from 3.75%. Those rates don’t include fees associated with obtaining mortgage loans. The disparate moves in the mortgage products mirror conditions in the broader bond market. The 30-year fixed-rate mortgage tracks the benchmark U.S. 10-year note, while the shorter-lived loans track short-term debt instruments, like LIBOR. Generally speaking, investors can expect to receive higher interest payments for longer-term debt, since lending money for longer periods carries more risk than shorter timeframes do. But when things get out of whack in the economy and markets, that can change. A look at the 10-year U.S. Treasury note and the mortgage purchase applications indexMarketWatch On March 22, that’s exactly what happened. The “yield curve” — a visual representation of how much… Read more »
  • Home Prices Have Reached Record Highs—Despite the Housing Slowdown
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    welcomia/iStockThe housing slowdown that has given hope to price-squeezed buyers, struck fear into the hearts of sellers, and captivated real estate aficionados from coast to coast appears to have taken a break. Home list prices aren’t coming down, it seems—instead they reached a new all-time high as the busy spring market begins. Median list prices crossed the $300,000 mark for the first time in March, according to a recent realtor.com® report. And while annual price growth had been slowing and is even down in a few parts of the country, nationally list prices shot up 7.2% year over year in March. That’s significantly more than inflation, which was just 1.5% in February. “Prices are continuing to rise and they’re going to get higher,” says Danielle Hale, chief economist of realtor.com. “The same property today that’s for sale is more expensive, and we’re seeing more higher-end homes for sale.” So why are prices rising if the real estate market is supposed to be softening? “In a slowing market, it’s not uncommon to have a gap between list prices and sale prices. It can take sellers a little bit of time to catch up to the reality,” Hale says. The softening in the market began… Read more »
  • Home Buyers See Recession as Likely, but It’s Not Stopping Them
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    LightFieldStudios/iStockWhile the U.S. economy has been chugging upward for the last seven years, the good times could be coming to an end. But that isn’t deterring determined home shoppers from trying to close on a home. Whether it’s sooner or later, most home buyers, according to a recent realtor.com® survey, believe a recession is on the way (much like winter on “Game of Thrones”). About 70% of home shoppers believe the United States will enter a recession within the next three years. More than 1,000 active home buyers participated in the survey. “There may be concern among some consumers, but economists and analysts generally expect that the next recession will be more mild than the [Great Recession], particularly in the housing market,” says Danielle Hale, realtor.com’s chief economist. However, these gray clouds on the horizon could have a silver lining. If a downturn hits, about 41% of shoppers expect the housing market will fare better than it did in the Great Recession of a decade ago. Another 36% of respondents believe it’s going to be worse, while 23% think it’ll be just as bad. Yet other life factors are simply closer to home. Another recession isn’t going to stop information technology… Read more »
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