In Time for Buying Season, Rates Reach Yearly Lows

The 30-year fixed-rate mortgage, a popular choice among buyers, sank even lower this week, matching its yearly low of 4.71 percent from January, reports Freddie Mac in its weekly mortgage market survey. Last year at this time, the 30-year fixed-rate mortgage averaged 5 percent.

Meanwhile, the 15-year fixed-rate hit a new yearly low of 3.89 percent this week. Last week, the 15-year fixed-rate mortgage averaged 3.97 percent. The 15-year rate averaged 4.36 percent last year at this time. It reached its lowest level on record in November when it averaged 3.57 percent.

The one-year adjustable-rate mortgage averaged 3.14 percent, down from last week’s 3.15 percent. Last year at this time, it averaged 4.07 percent.

“Weaker economic data reports reduced Treasury bond yields and allowed mortgage rates to drift lower for the third consecutive week,” says Frank Nothaft, Freddie Mac’s chief economist.

Source: “30-Year Fixed-Rate Mortgage Matches Yearly Low of 4.71 Percent,” Freddie Mac (May 5, 2011)

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New-home sales jump 27%, biggest gain in 47 years

Sales of new homes surged 27% last month, bouncing off the previous month’s record low and blowing past expectations as better weather and government incentives boosted sales.The Commerce Department said Friday that new-home sales rose in March to a seasonally adjusted annual sales pace of 411,000. It was the strongest month since last July and the biggest monthly increase in 47 years.

Economists surveyed by Thomson Reuters had expected a sales pace of 330,000. February’s results were revised upward to 324,000, but remained an all-time low. Sales had been especially weak over the winter, partly due to bad weather in much of the country.

The median sales price was $214,000, up more than 4% from a year earlier but down more than 3% from February.

The new-home sales report reflects signed contracts to purchase homes rather than completed sales and thus gives economists a feel for how many buyers were out shopping for new homes in a given month.

It is likely capturing consumers who are trying to qualify for federal tax credits that will expire at the end of this month. The government is offering an $8,000 credit for first-time buyers and $6,500 for current homeowners who buy and move into another property.

To qualify, buyers must have a signed contract complete by the end of next week and must complete the transaction by the end of June. Nearly 1.8 million households have used the credit at a cost of $12.6 billion, according to the Internal Revenue Service.

The rise in new-home sales was seen nationwide. Sales grew a whopping 44% in the South and 36% in the Northeast. They also rose about 6% in the West and 3% in the Midwest.

The number of new homes up for sale in March fell 2% to 228,000. At the current sales pace, it would take nearly 7 months to exhaust that supply.

Source: Associated Press, by Alan Zibel (04/26/2010)

New Home Sales Jump in March

Sales of new homes rose 27 percent in March compared to February, the U.S. Commerce Department announced Friday. It was the largest monthly increase since April 1963, when sales jumped 31.2 percent.

In addition, the National Association of REALTORS® reported last week that sales of previously owned homes rose 6.8 percent.

Economists attribute the figures to buyers taking advantage of the $8,000 tax credit scheduled to expire at the end of this month.

“In simple terms, housing is a bargain again, and buyers are responding,” Michael D. Larson, a real estate and interest rate analyst at Weiss Research, wrote in a research note. “That is unambiguously good news for the market going forward.”

Source: The New York Times, Christine Hauser (04/23/2010)

Northwest MLS brokers report 51% jump in pending sales

Home sales around Washington state surged last month, with brokers reporting activity at levels “like we haven‟t seen in a while,” according to the owner of a Seattle brokerage. Northwest Multiple Listing Service members reported 8,605 pending sales during March for a 51 percent increase over the same month a year ago.

Notably, while entry-level home sales have been driving the market, brokers also reported strong activity at the upper end of the price spectrum. Last month, 91 residences (76 of them in King County) sold for $1 million or more; twelve months ago only 40 homes and condos fetched $1 million or more.

Pending sales (offers made and accepted, but not yet closed) in the four-county Puget Sound region rose 60 percent from twelve months ago, led by Snohomish County where the number of transactions jumped more than 77 percent.

NWMLS director Diedre Haines, regional managing broker for Coldwell Banker Bain in Snohomish County, said her network of three offices broke a nine-year old record for the most transactions in a single month. She attributes the gains to several factors, including tax incentives and the return of jumbo loan financing, but also noted an uptick in activity for parcels of land.

“We are once again representing buyers in the purchase of both raw undeveloped land and platted lots,” Haines remarked, adding, “This is the first time we have seen land purchases in over two years.” Of the buyers, she said some intend to start building now and others are buying for investment.

 MLS brokers also reported year-over-year increases in the number of new listings added to inventory and in the volume of closed sales. Members added 12,994 new listings to the system last month, up 26.7 percent from the year-ago total of 10,252 new listings.

Last month‟s new listings included 11,041 single family homes and 1,953 condominiums. Those additions brought the total inventory to 38,716. That compares to 39,825 total active listings at the same time a year ago, a decrease of about 2.8 percent.

Closed sales outpaced year-ago totals by a wide margin. Members reported 4,972 completed transactions during March, a gain of 1,590 sales for a 47 percent increase.

Prices for last month‟s closed sales of single family homes and condominiums (combined) were down about 2 percent system wide. Since January, however, prices have inched up almost 1.8 percent.

Within King County, price changes from a year ago ranged from double-digit increases for homes on Mercer Island (up 26.9 percent), Central Seattle (up 14.9 percent), and Vashon (up 10 percent), to double- digit declines in some parts of South King County.

“Homes that are positioned well – at every price range – are selling quickly,” commented NWMLS director Pat Grimm, the owner/designated broker at Windermere Real Estate/Capitol Hill, Inc. in Seattle. Among examples he cited was a Medina home that sold for its $2.35 million asking price in seven days. It drew three quick offers with escalation clauses. At the lower end of the price spectrum was a 2-bedroom Capitol Hill condo listed at $230,000. It also received multiple offers and sold for full price in three days.

Some buyers have to make offers on multiple properties before they win, but they‟re still reticent about paying more than the list price, according to Grimm. He noted buyers are not waiving inspections, but said some bidders are doing pre-offer inspections.

“Sales activity is at a high level like we haven‟t seen in a while, but still not the frenzy we saw a few years ago,” Grimm remarked, adding, “And that‟s a good thing.”

Condo sales across the 21 counties in the MLS system showed significant improvement from a year ago. MLS members reported 1,199 pending sales last month, which compares to 645 sales for the same month a year ago for an increase of almost 86 percent.

Condo prices still lag year-ago figures. The median price for last month‟s completed sales was $225,000, down about 7 percent from the year ago figure of $242,000. Within Seattle, however, prices are up. The median price for last month‟s completed sales of condos in Seattle was $291,000, an increase of 5.8 percent from a year ago when the median sales price was $275,000.

“The Seattle surge has returned thanks to the opportunities that have been afforded to homeowners through the federal tax credit, historically low interest rates, and increased affordability,” observed J. Lennox Scott, chairman and CEO of John L. Scott Real Estate. “As predicted, there is a surge of sales activity in the „more affordable‟ price ranges which is causing a chain reaction of sales up the price points,” he reported. Scott said he expects the momentum to continue in the coming weeks as the April 30 expiration of the tax credit approaches.

Source: NWMLS (04/05/2010)

Homebuyers scramble as mortgage rates jump

The era of record-low mortgage rates is over.

The average rate on a 30-year loan has jumped from about 5 percent to more than 5.3 percent in just the past week. As mortgages get more expensive, more would-be homeowners are priced out of the market — a threat to the fragile recovery in the housing market.

And if you wanted to refinance at a super-low rate, you may have missed your chance. Mortgages under 4 percent are still available, but only for loans that reset in five or seven years, probably to higher rates.

Rates are going up because of the improving economy and the end of a government push to make mortgages cheaper.

For people putting their homes on the market this spring, rising rates may actually be a good thing. Buyers are racing to complete their purchases and lock in something decent before rates go even higher.

“We are seeing some panic among potential buyers who have not found houses yet,” said Craig Strent, co-founder of Apex Home Loans in Bethesda, Md. “They’re saying: Man, I should have found a house three weeks ago or last month when rates are lower.”

It’s all about affordability. For every 1 percentage point rise in rates, 300,000 to 400,000 would-be buyers are priced out of the market in a given year, according to the National Association of Realtors.

The rule of thumb is that every 1 percentage point increase in mortgage rates reduces a buyer’s purchasing power by about 10 percent.

For example, taking out a 30-year mortgage for $300,000 at a rate of 5 percent will cost you about $1,600 a month, not including taxes and insurance. But the same monthly payment at a rate of 6 percent will only get you a loan of $270,000.

Good economic news is the first reason rates are rising: U.S. government debt, a safe haven during the recession, is losing its appeal as investors turn to stocks and riskier corporate bonds.

Lower demand for debt means the government has to offer a better interest rate to sell its bonds. The yield on the 10-year Treasury note, which is closely tracked by mortgage rates, hovered above 4 percent this week, the highest since June, before falling back slightly.

The second reason is the Federal Reserve. Last week, the Fed ended its program to push mortgage rates down by buying up mortgage-backed securities. When demand from the central bank was high, rates plummeted to about 4.7 percent for much of last year. And business boomed for mortgage lenders as homeowners raced to refinance out of adjustable-rate mortgages and into fixed loans.

As of Wednesday, the Mortgage Bankers Association put the national average for a 30-year fixed-rate mortgage at 5.31 percent. One week ago, it was 5.04 percent.

Many analysts forecast rates will rise as high as 6 percent by early next year. If they go much higher, the already shaky housing recovery could stall. And that could slow the broader economic rebound.

In a normal market, with home prices steadily rising, a jump in rates doesn’t cause a big dip in demand. That’s because people know their homes will eventually rise in value and they’re willing to accept a higher mortgage payment.

But now home prices are flat nationally and still falling in some places. Potential buyers are nervous about jumping in.

“In this environment, any rise in mortgage rates does significant damage because people don’t think they’re going to get their money back” if prices fall, said Mark Zandi, chief economist at Moody’s Analytics.

For people who bought their first home in the 1980s, when rates stayed over 10 percent for several years, paying 6 percent for a home loan may seem like a steal. But it’s coming as a shock to many first-time homebuyers this spring.

In Overland Park, Kan., Sirena Barlow checks mortgage rates online once a day. She’s been shopping for something around $130,000 and wants to sign a contract this month, to take advantage of a tax credit for first-time homebuyers.

Barlow, a legal assistant, already has told her landlord she’s moving, so her stress level is high. Her real-estate agent, Michael Maher, has been doing his best to calm Barlow and other clients, but rising rates are making them anxious.

“It’s like giving hyperactive kids ice cream,” he said. “It has really taken the ones who are focused on buying and amped them up a little bit

Source: The Associated Press, by By ALAN ZIBEL and ADRIAN SAINZ (04/07/2010)

King County house prices post year-over-year rise for first time in 2 years

Median house prices in King County rose year-over-year in March for the first time in more than two years, according to statistics released Monday by the Northwest Multiple Listing Service.

The median price of a single-family home that sold last month was $367,250, the broker-owned service said, up 0.9 percent from March 2009.

The last time prices rose year-over-year was in January 2008.

The March bar was low, however. March 2009’s median, $363,850, was the lowest in years. And last month’s number, while higher, still was the lowest since then.

Median house prices in King County have fluctuated between $370,000 and $395,000 over the past year.

The broker-owned service also reported a surge in sales, which agents said was spurred by low interest rates, greater affordability and the upcoming expiration of federal tax credits for many homebuyers.

Buyers closed on 1,596 houses in King County in March, up 65 percent from the same month last year. Condo closings were up 47 percent.

Pending single-family home sales — offers that have been accepted by sellers, but haven’t closed — were up 63 percent in King County. The last time more pending sales were recorded was in May 2007, before the market turned.

But pending sales have become a less-reliable measure of sales activity in recent months as many deals — especially “short sales” for less than the owner owes on the house — fail to close.

In Snohomish County, closed house sales were up 74 percent year-over-year in March. The median sale price, $279,950, was down 11 percent.

Source: Seattle Times, by Eric Pryne (4/05/2010)

Foreclosed Borrowers May Get Loans Again

Will people who currently face foreclosure or short sales or who walk away from their underwater properties ever be able to get financing to buy another home down the road?

Banks haven’t been very forthcoming on this issue. However, knowledgeable observers of the situation say that while it may take some time, the situation will right itself for most people.

Because bankrupt borrowers have eliminated their debts, they should “constitute attractive fodder for mortgage lenders,” says University of Michigan law professor John Pottow, whose specialty is bankruptcy.

As home prices and the mortgage market stabilize, lenders will be motivated to lend to people who previously had financial troubles if they look like they can pay the next time around, says Alan Riegler, a consultant with CCG Catalyst, which advises banks.

“The lender who figures out how to do more of this case-by-case stuff cost-effectively is going to end up ahead of the pack,” Riegler says.

Source: Inman News, Matt Carter (03/05/2010)