Thursday, April 4, 2013
Mortgage Applications Fall, But Why?
As I have been stating numerous times in my previous posts, buyer activity has been going up and up and up. More and more buyers are coming out every week which has brought up the dilemma of very high demand (buyers) and very low supply (sellers). With all of these buyers coming out you would assume that the Mortgage applications would be going up due to more people purchasing homes...and you would be right and wrong. Mortgage applications for home purchases (which is a leading indicator of home sales) are up 1.4%, however mortgage applications for refinancing home loans are down 5.6%. The amount that the refinancing applications decreased offset the increase in the amount of applications for mortgages on home purchases. That is why, according to the Mortgage Bankers Association, the overall figure for mortgage applications has decreased by 4% for the week ending on March 29. This is good news for the real estate industry because if less people are refinancing it means that less people are considering staying in their home as opposed to moving to another home; more moving means more activity in the real estate market. Refinancing loans have accounted for 74% of total mortgage applications which is down from the previous weeks number of 75%. Also, the fixed 30-year mortgage rate has dropped 3 basis points from 3.79% to 3.76%. These are just some more strong signs of a solid recovery in progress!
Wednesday, March 20, 2013
Celebrity Homes ~ Michael Jordan
Frrrooooommmmmm North Carolina.....Standing 6'6''...number 23.....
Yes, this Celebrity homes post is about non other than the basketball revolutionary who goes by the name of Michael Jordan. Although he is best remembered for his time in Chicago with the Bulls, Jordan has moved back to Tar Heel country; that's right, North Carolina. According to Fox Sports, Jordan has just purchased a home in Cornelius, NC which is only 22 miles away from the Charlotte Bobcats arena where Jordan is the majority owner of the club. The home was bought for $2.8 million, which for Jordan seems quite conservative. However, Jordan seemed to work his magic once again. The home was originally listed for $3.99 million in 2011, but then went through a foreclosure and was re-listed for $3.49 million until it was swindled down to a mere $2.8 million.
The home sits on a lot that extends out into Lake Norman inside a private and gated community. Built in 1993, this 12,310 square foot home features 6 bedrooms and 8 baths, a basement holding a home entertainment center and person gym, and a two-story great room which opens out to a terraced patio holding a pool and spa. This home is just an addition to his Real Estate collection featuring his custom estate in Chicago (currently on the market), his home in Jupiter, Florida, another home in Salt Lake City, along with a condo in Charlotte.
Yes, this Celebrity homes post is about non other than the basketball revolutionary who goes by the name of Michael Jordan. Although he is best remembered for his time in Chicago with the Bulls, Jordan has moved back to Tar Heel country; that's right, North Carolina. According to Fox Sports, Jordan has just purchased a home in Cornelius, NC which is only 22 miles away from the Charlotte Bobcats arena where Jordan is the majority owner of the club. The home was bought for $2.8 million, which for Jordan seems quite conservative. However, Jordan seemed to work his magic once again. The home was originally listed for $3.99 million in 2011, but then went through a foreclosure and was re-listed for $3.49 million until it was swindled down to a mere $2.8 million.
The home sits on a lot that extends out into Lake Norman inside a private and gated community. Built in 1993, this 12,310 square foot home features 6 bedrooms and 8 baths, a basement holding a home entertainment center and person gym, and a two-story great room which opens out to a terraced patio holding a pool and spa. This home is just an addition to his Real Estate collection featuring his custom estate in Chicago (currently on the market), his home in Jupiter, Florida, another home in Salt Lake City, along with a condo in Charlotte.
Tuesday, March 19, 2013
Embrace The Rise In Mortgage Rates
As most of you are aware of the tremendous dip and record lows in the mortgage rates, many are slow to the news that the mortgage rates have began their turn-around. First, let's do a little background check on the mortgage rates just to make sure everyone reading this is of complete understanding when I begin to explain the current mortgage rate situation we are in.
Just to be thorough let's start with square one: what is a mortgage rate? A mortgage rate is literally the rate of interest that is charged on a mortgage. This "rate" is most commonly generated by the mortgage lender after fully evaluating the situation at hand and can either be fixed (which means the rate you agree upon will be locked-in for the term of the mortgage) or variable (which means the rate will fluctuate in accordance with a benchmark interest rate). Also, when I speak about the mortgage rates and reference any percentages I will be talking about the national average of the 30-year fixed mortgage rate (the 30-year fixed mortgage is commonly used as a standard because it is the most popular choice for home buyers).
The national average dipped all the way down to the low 3.3% range last year which achieved record lows, but it is now beginning its move upward. According to Freddie Mac figures, last week the rate hit a six month high of 3.63%. Mortgages rates are expected to continue rising throughout this year which would make owning a home more expensive. I know the first reaction to this news is probably not a positive one, but after I go over a few things I believe I can turn those feelings positive. Let's review the rates in five year increments beginning with 1980 in order to put this "rate" into perspective:
Just to be thorough let's start with square one: what is a mortgage rate? A mortgage rate is literally the rate of interest that is charged on a mortgage. This "rate" is most commonly generated by the mortgage lender after fully evaluating the situation at hand and can either be fixed (which means the rate you agree upon will be locked-in for the term of the mortgage) or variable (which means the rate will fluctuate in accordance with a benchmark interest rate). Also, when I speak about the mortgage rates and reference any percentages I will be talking about the national average of the 30-year fixed mortgage rate (the 30-year fixed mortgage is commonly used as a standard because it is the most popular choice for home buyers).
The national average dipped all the way down to the low 3.3% range last year which achieved record lows, but it is now beginning its move upward. According to Freddie Mac figures, last week the rate hit a six month high of 3.63%. Mortgages rates are expected to continue rising throughout this year which would make owning a home more expensive. I know the first reaction to this news is probably not a positive one, but after I go over a few things I believe I can turn those feelings positive. Let's review the rates in five year increments beginning with 1980 in order to put this "rate" into perspective:
- 1980 -- 13.74%
- 1985 -- 12.43%
- 1990 -- 10.13%
- 1995 -- 7.93%
- 2000 -- 8.05%
- 2005 -- 5.87%
- 2010 -- 4.69%
Look at the recent mortgage rate jump up to 3.63% and then compare that to the numbers you see above; although the rates are slightly rising they are still very low.
There are some other aspects to consider as well. Some housing analysts are saying that the rising mortgage rates could actually help aid the housing recovery. A lot of the home buyers who have been sitting on the fence may see the rising mortgage rates as a final sign that the housing recovery is fully on its way; and a sign to buy now because, while borrowing is still on the inexpensive side, it is time to lock in a rate now before the rates move any higher. "Rising interest rates alone are not enough to slow down the housing recovery," Barney Hartman-Glaser, a real estate finance professor at Duke University, told Fortune. “My sense is that underwriting standards are getting easier to satisfy, and so we would expect rates to rise as slightly more risky borrowers are brought into the fold."
Furthermore, Andrea Heuson, a finance professor at the University of Miami, stated that the increase in mortgage rates interestingly enough coincides with increased demand for loans across United States businesses. Commercial and industrial loans were up 12.5% in January when compared to the previous year, reaching $1.5 trillion. Heuson told Fortune that, "The recent increase ... bodes well for the future of the U.S. economy." The reasoning for that statement is that when businesses borrow more, it usually boosts the economy in several ways which includes job growth,increasing consumer confidence, as well as increasing home sales.
Thursday, March 14, 2013
Housing Recovery Firmly In Motion
Throughout the past few months I have been discussing how we got into this housing mess, what needs to happen for a recovery, and then following the progress of our housing market. If there was any doubt of our country being in a true and consistent housing recovery, it should now be abandoned. Kiplinger, a well-known and respected financial reporting and forecasting firm, has stated that the housing recovery is "firmly" underway. One of the main reasons for this statement is the fact that home prices are consistently rising and inventories are consistently diminishing. This is a good indication of a housing recover because we are seeing the prices rise along with the buyers' ability and willingness to dish out those higher prices in turn leading to a lower inventory. On top of that great news, Kiplinger also states that the housing recovery will help to carry the overall economy at a time when US exports are decreasing.
“The biggest reason we think we’re on firm ground is that we’re seeing every indicator on the way up,” says Karen Mracek (A Kiplinger editor and real estate analyst). “As with the overall economy, it’s kind of hard to call the bottom or the pivot point. But we’re seeing a range of indicators that suggest pretty solid growth going forward.”
Aside from the rising home prices and supply of homes there are other indicators that point to a strong and sturdy recovery. These include multiple-bids on homes, increased new-home construction, and credit availability. If these fundamental aspects can continue their great progress we will see more borrowers come out from underwater along with new jobs in the real estate and construction industries.
Although the improvements have been, and will continue to be un-even across the country with a slower turn-around in the Florida Metropolitan areas and the mid-west, the changes are still continuing to take place and this country's housing marketing is moving firmly in the right direction. For our country overall, Mracek says that the current housing recovery is real and sustainable, but she also points out that the rise in home prices and decline in inventories will not maintain its current pace.
“We see prices leveling out a bit more [in the future] from the late jumps in 2012,” she says. “There are still foreclosures for the banks to work through. As prices improve, you’re going to see banks get rid of REOs.”
“The biggest reason we think we’re on firm ground is that we’re seeing every indicator on the way up,” says Karen Mracek (A Kiplinger editor and real estate analyst). “As with the overall economy, it’s kind of hard to call the bottom or the pivot point. But we’re seeing a range of indicators that suggest pretty solid growth going forward.”
Aside from the rising home prices and supply of homes there are other indicators that point to a strong and sturdy recovery. These include multiple-bids on homes, increased new-home construction, and credit availability. If these fundamental aspects can continue their great progress we will see more borrowers come out from underwater along with new jobs in the real estate and construction industries.
Although the improvements have been, and will continue to be un-even across the country with a slower turn-around in the Florida Metropolitan areas and the mid-west, the changes are still continuing to take place and this country's housing marketing is moving firmly in the right direction. For our country overall, Mracek says that the current housing recovery is real and sustainable, but she also points out that the rise in home prices and decline in inventories will not maintain its current pace.
“We see prices leveling out a bit more [in the future] from the late jumps in 2012,” she says. “There are still foreclosures for the banks to work through. As prices improve, you’re going to see banks get rid of REOs.”
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