Each day the Research staff takes a look at recently released economic indicators, addressing what these indicators mean for REALTORS® and their clients. Today’s update discusses mortgage rates.
Based on the latest monthly Realtors® Confidence Index, which summarizes the responses of over 3,600 Realtors® to a market survey, there has been some weakening in recent months in Realtor® overall confidence in the outlook for residential single family home markets. Compared to a year ago confidence is up, but in recent months the level of confidence in current or future market conditions has been declining. Realtor® confidence appears to coincide with the trends in the overall economy, which have been mediocre. Currently the Administration appears to be strongly focused on energizing economic activity. If these efforts at stimulating the economy are successful, we will probably see an upturn in Realtor® confidence.
What does this mean for your clients? Generally the well-known, successful investors buy low and sell high in the stock market—the exact opposite of what the rest of us do. In the case of residential real estate, nobody rings a bell to let us know when the housing market bottoms out, and the county has thousands of real estate submarkets. Many observers seem to have concluded that the residential real estate markets may be near their bottom in terms of price. Given that buyers hold on to a house for eight years or more, the current residential markets appear to offer some significant opportunities in terms of price, interest rates, and product availability.
Each day the Research staff takes a look at recently released economic indicators, addressing what these indicators mean for REALTORS® and their clients. Today’s update discusses personal income and consumer spending as well as the new indicators forecast.
- Based on information from the September Realtors® Confidence Index, the number of homes on the market for more than 6 months until sold rose in September but was still below the experience in May, June, and July.
- A total of 35 percent of homes were on the market less than 2 months before being sold. All real estate is local, so broad generalizations have many exceptions. However, amid all of the doom and gloom propounded by reporters, the overall housing market continues at sales level approximately equal to that experienced in the past three years.
- In terms of sales volume, the market appears to have been moving sideways, waiting for some overall recovery in the jobs market. In terms of price, the results have been mixed around the country but generally weak except in areas experiencing job growth and lower levels of distressed real estate.
- Most commentators continue to predict home price stabilization in the foreseeable future, depending on overall economic conditions, employment, and consumer confidence.
Each day the Research staff takes a look at recently released economic indicators, addressing what these indicators mean for REALTORS® and their clients. Today’s update discusses jobless claims and the GDP.
Based on information from the September Realtors® Confidence Index, a monthly survey with responses from over 3,600 Realtors®, 53 percent of respondents have expectations of constant or slightly rising prices for the next year. Price expectations are lower than earlier this year but also somewhat better than a year ago. Realtor® comments indicate that buyers continue to be cautious in their outlook while awaiting a more robust upturn in the economy.
Each day the Research staff takes a look at recently released economic indicators, addressing what these indicators mean for REALTORS® and their clients. Today’s update discusses mortgage purchase applications, durable goods, and new home sales.
- Many consumers have recently faced higher rates or have been forced to put down larger downpayments due to a change to the way loans are classified.
- The maximum size of a loan that can be financed by the FHA was reduced forcing some borrowers to make larger downpayments.
- The minimum size for jumbo loans (i.e., loans not eligible for FHA, Fannie Mae, or Freddie Mac financing) may also have been lowered, forcing many prospective buyers to increase their downpayments and/or pay higher mortgage rates.
- 17% of respondents with a seller-client reported that their seller client was negatively impacted by the change in the FHA or GSE loan limits.
- Sellers’ agents who responded to the survey noted that the disruption from the change in limits caused some sellers to lose their homes to foreclosure. In other cases, sales took much longer due to a decline in buyer interest.
- To read the complete new “Impact of New Conforming Loan Limits” survey, click here >
Recent refinancing activity shows that the new mortgage rate is about 80 percent of the old rate. That is, for example, someone tapping into a 4.0 percent mortgage rate from a previous rate of 5.0. Though the paperwork demands for refinancing have become excessively cumbersome, the money saved is worth it and people are putting up with all of the questions on their finances in order to save.
Unfortunately, not everyone who could benefit meaningfully has been able to refinance. Mainly this means those homeowners who happen to live in markets where prices came down hard and thereby put their mortgage amount above the appraisal value of their home. Some relaxation on rules, including lower fees, for refinancing is being discussed by policymakers. NAR has been pushing for the passage of the Boxer-Isakson bill, which would permit easier refinancing for those underwater homeowners who have been current on their payments. The basic idea is simple in that if someone could pay a $1,000 mortgage then surely the same person can pay $850. These would greatly reduce incentives for homeowners to default and furthermore is fair, given the very wide interest rate spread currently existing between bank deposits and bank loans.
Falling Rental Vacancies
The total number of rental households has increased to 38 million in the second quarter of this year, an increase of 1.4 million renters in the past 12 months. Because there has not been an overproduction in multifamily units in the past decade, higher demand for rental units has directly resulted in falling vacancy rates. The latest census data, which measures rentals of both single-family and multifamily units, report a 9.2 percent vacancy rate, the lowest since 2002. Private sector data from REIS on just multifamily units at mid-to-large cities in the U.S. fell to a 5.5 percent vacancy rate.
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