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What Influences Mortgage Rates?

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Keeping up with the ups and downs of mortgage rates can be daunting.  As home owners consider refinancing their home and buyers try to determine the right time to purchase a home and secure a mortgage rate, it can feel like they are aiming at a moving target and aren’t sure when to actually lock in a rate.  It can make many wonder what causes the rates to fluctuate?  The answer is, many factors impact the mortgage rates.

In an article published by Bankrate, Deborah Khearns thoroughly details several of the reasons mortgage rates increase and decrease over time.  As many know, the Federal Reserve can play a roll in mortgage rate changes.  As the article states, “The Federal Reserve doesn’t set mortgage rates but, sometimes, their decisions can indirectly influence them.”

It is probably pretty obvious that the economy and its current conditions influence the mortgage rates.  It may be surprising, however, to learn that it’s a bad economy that actually helps improve mortgage rates for buyers.  As the economy becomes less favorable, investors tend to move toward safer investments like bonds.  According to Greg Mc Bride, Bankrate’s chief financial analyst, increased number of bond investors results in “…pushing bond prices higher but the yields on those bonds lower.”

The article goes on to discuss the influence of inflation and origination costs as well as the borrower’s financial and credit history and the impact of those on rates.  Read the entire article.

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Why is National Delinquency Rate is Important?

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The national delinquency rates on home is a number that may not be tracked diligently by real estate professionals.  It isn’t as widely tracked as mortgage interest rates, average days to close and housing price fluctuations, but it may offer insight to the health of the American economy.

The Mortgage Bankers Association released the most recent national delinquency rate and it is lower than it’s been in 18 years.  According to an article published by the Chicago Tribune, “That’s a big deal, because when large numbers of owners do the opposite – stop paying on their home loans for months at a time — the entire economy feels the effects. Spiking delinquencies in 2007-2008 ushered in the global financial crisis and spawned tidal waves of foreclosures that devastated borrowers and their communities.”    

It sounds like it is some great news, but what has caused the number of delinquencies to drop?  Perhaps, and most likely, we can thank the underwriting rules that were tightened up back in 2010.  Specifically, mortgage lenders are requiring a high FICO score to qualify, avoiding approving mortgages to high risk borrowers more likely to default.   These changes, coupled with continued low rates, a healthy economy and a drop in unemployment are helping ensure more home owners stay on track with their payments.

Read the entire article.

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Housing Market Predictions: Are We In Store for a Crash?

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Could a housing market slowdown, or worse a housing market crash, be looming?  If Lawrence Yun’s, National Association of Realtors chief economist, analysis is correct, the answer is a resounding “no”.   In fact, the slowdown in the housing market that some areas are experiencing is due to “insufficient supply”, not a lack of demand by buyers.

In an article published by Realtor Magazine, many positive signs for the housing market are present.  For example, the article states “home price growth remains strong in markets across the country—about 5 percent on a nationwide basis so far this year”.

However, the negative effect of the lack of housing supply is that the prices are being driven into price ranges that price some buyers out of the market.  A solution to that issue,the article notes , would be to have builders increase the supply of homes available.

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Real Estate Experts Provide Advice for Investors

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Real Estate is a popular investment vehicle for American investors.  In fact, 89% of investors put their money into real estate, according to a report by Better Homes and Garden Real Estate.  In a recent article published by Forbes, real estate experts provide reminders and warnings regarding real estate investments in order to help insure a profitable investment.

One real estate professional, Lee Kiser, reminds investors to study the real estate taxes of a property before making the purchase.  Its important to understand what the upcoming tax liability may be down the road, and a real estate tax professional may be able to help an investor prepare accordingly.

Shelling out the money for a professional inspection and appraisal might not be top of the list for investors, but according to Angela Yaun of the Day Realty Group, it may help save more money for the investor later.  The investor may be able to get items covered under a home warranty if they are proven to be functioning at the time of the inspection.  It can also make the buyer aware of repair expenses they should plan for later.  A professional appraisal will provide the most accurate square footage and appraised value, important facts to have on hand when the investor is looking to sell their property.

The article goes on to detail the importance of understanding Home Owners Association restrictions, obtaining a Master Land Use plan for the area surrounding the property, and getting accurate and professional estimates for repairs, holding costs and closing costs.

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Photo Credit: Antonio Carlos Cascatrina

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Could 2018 Be The Right Time to Sell Your Home?

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If you have been waiting for the right time to sell your home, there are many reasons experts are saying that the time has come.  In an article written by Devon Thorsby, published by U.S. News and World Report, the reasons that 2018 might prove to be a good time to sell a home are listed.

First and foremost, the past few years of low inventory of homes for sale has left prospective home buyers more than ready to scoop up the perfect house.  Their frustration with available homes has led many house hunters to begin their search earlier than normal with the hopes of purchasing a home before other buyers make their offer.

Additionally, interest rates are still relatively low.  They have been slowly creeping up and are expected increase to 5 percent in 2019.  Many home buyers are motivated to purchase a home sooner rather than later in order to secure a lower interest rate.

Thorsby details additional rationale for putting that “For Sale” sign up this year.  Read the entire article here.

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Why Are More Americans Choosing to Rent instead of Buy Homes?

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The debate over why households choose renting over purchasing a home in the United States has been a hot topic lately.  Analysts have indicated the young generation of millennials are not interested in being tied down to home ownership and prefer renting over buying. However, an article published by CNN by Daniel B. Kline, points out that it is not just millennials who are opting to rent instead of making a home purchase.  Kline also notes that the decision to rent may not be a lifestyle choice, but a financially driven decision.

It is true that the number of households renting a home has increased over the past decade; almost by 10 million.  It is also true that 65 percent of household headed by those 35 years old and younger rent their homes.  However, it’s the heads of households aged 35-44 that made the biggest increase over the past decade.  In this age group, “the percentage of renters jumped from 31% in 2006 to 41% in 2016”.   Heads of households between 45-65 renting homes also increased over the past decade.

However, these households may not all be renting based on lifestyle choices.  In fact, research indicates that many who rent homes would actually like to purchase a home someday.  Further, surveys show that 65% of renters indicated that they are renting homes due to circumstances, not purely by choice.  Circumstances such as increased home prices and tougher mortgage standards may be partially to blame.

Read the entire article.

 

 

 

Photo Credit:  Mark Moz

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Low Inventory is Concerning Real Estate Professionals

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The low inventory of homes for sale is causing some real estate companies to panic a bit.  The number of homes for sale March 2017 compared to March 2016 fell seven percent according to the National Association of Realtors.  In an article published by CNBC by Dian Olick, she quotes Glenn Kelman, CEO of Seattle-based Redfin, a real estate firm, “”The inventory is reaching historic lows. It’s never declined faster than it did last month. It’s freaking us out — it’s affecting our business; it’s limiting our sales.”  

The cause of this low inventory issue can be attributed to a few factors.  To begin, many homeowners are deciding to become landlords.  Instead of selling a home when moving on, homeowners are holding on to their home and renting it out.  Another reason is new home construction is declining.  On average, home builders are building about 18 percent fewer homes than the historic average.

The good news for home owners looking to sell, homes are selling quickly and some are even selling above list price.  Homes in April 2016 went under contract in 50 days, as of April 2017, that number decreased to 40 days.

Read the entire article.

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There are Twice as Many Vacant Foreclosures in the Chicago Area This Year, Find Out Why

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“A strong seller’s market along with political pressure has likely motivated lenders to complete the foreclosure process over the past year on many vacant properties that were lingering in foreclosure limbo for years,” Attom Senior Vice President Daren Blomquist said in a statement.3993310255_273389be94_o

As a result, the number of vacant bank-owned properties in the Chicago-land area has almost doubled since the third quarter of 2015; the number has increased from 1,245 in the third quarter of 2015 to 2,379 by the end of the second quarter of 2016.  The good news is, with an average market time of 92 days in the Chicago-land area, these foreclosures may not remain vacant for long.

According to an article written by Dennis Rodkin, published by Crain’s Chicago Business, another effect of the strong sellers’ market is a significant decrease in the number of “zombie foreclosures”.  Instead of delaying the foreclosure process longer, the banks are moving forward with seizing the property, and moving it through the pipeline.  Ultimately, a vacant foreclosure is more desirable than a zombie foreclosure.  “Assuming that the foreclosing lenders are maintaining these properties and paying the property taxes, they pose less of a threat to neighborhood quality than zombie foreclosures,” he said.

Read the entire article.

 

Photo Credit: BasicGov

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Which U.S. Cities’ Housing Markets are Growing? Which Cities are on the Decline?

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american-flag-flies-in-the-autumn-sun-1384878This year, the real estate market has made significant improvements in many areas of the United States.  According to an article published in USA Today by Thomas C. Frohich, the median home price was at the highest since 2007 at the end of 2015, and increased another 4.9 percent by the end of 2016’s second quarter.

There are several U.S. cities reflecting this growth in housing prices, such as Boulder, CO, which had a 18.5 percent home price increase over the past year.  However, there are still many cities that are not reporting the same home pricing increases.  In fact, some cities, such as Atlantic City-Hammonton, NJ are seeing declines in home values.

The National Association of Realtors (NAR) reviewed home prices in close to 200 U.S. metropolitan areas.  A list of the fastest growing markets as well as the real estate markets on the decline were compiled.  Topping the list of growing cities behind Boulder, CO were Elmira, NY, Springfield, IL and Port St. Lucie, FL.  Cities with the most significant decline in prices besides Atlantic City were Binghamton, NY, Erie, PA and White Plains, NY.   Economic factors such as unemployment often seemed to be tied to the home prices in an area.   Inventory, demand and location are other factors that drive home prices up or keep them low, even declining.

To read the entire article and see the entire listing of growing and shrinking cities, click here.

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The Best Cities for Real Estate Investments

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With the median home price on existing homes predicted to rise 6 percent over the next year, investors are turning to real estate as a steady and tangible investment option.  HomeUnion evaluated the real estate market for both investors planning to sell or “flip” the properties as well as those looking to rent out the purchased properties.

To determine which cities made the list for investors looking to flip, HomeUnion looked for cities where prices have yet to return to levels reached before the recession, compared prices from early 2015 to early 2016 and took into account the local economics of the area.

According to an article published by Realtor.com by Peter Ortiz, the top ten cities for home price appreciation are:9682523008_55447863c2_o

  1. Jacksonville, FL
  2. Tampa, FL
  3. Orlando, FL
  4. Chicago, IL
  5. Detroit, MI
  6. Las Vegas, NV
  7. Cincinnati, OH
  8. Phoenix, AZ
  9. Cleveland, OH
  10. Minneapolis, MN

With more and more households holding off on the idea of owning their own home, deciding instead to rent, investors are looking to rental properties.  Prospective landlords may want to consider one of the cities HomeUnion found to have the highest returns for rental properties. The cities were evaluated based on the annual rent growth and local economies and those that ranked in the top ten are:

  1. Cleveland, OH
  2. Columbia, SC
  3. Birmingham, AL
  4. Pittsburgh, PA
  5. Milwaukee, WI
  6. Cincinnati, OH
  7. Memphis, TN
  8. Greenville, SC
  9. Tampa, FL
  10. Philadelphia, PA

Both studies evaluated only single family homes that fall within the range of $232,500 and lower.

Read the entire article.

 

Photo Credit:  Kerry Quinn

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