Monthly Archives: July 2014

FOMC Statement: Asset Purchases to end in October, Labor Market Stronger

FOMC Statement Asset Purchases to end in October Labor Market StrongerThe Federal Reserve’s Federal Open Market Committee (FOMC) released its customary statement at the conclusion of its meeting on Wednesday. FOMC members oversee the Fed’s monetary policy. In recent months, investors and economists have speculated on whether or not the Fed would continue tapering its asset purchases under its latest quantitative easing (QE) program, and whether the Fed would raise its target federal funds rate of 0.00 to 0.250 percent.

According to its statement, FOMC members plan to continue tapering monthly asset purchases of Treasury securities and mortgage-backed securities until asset purchases under the QE program conclude in October. FOMC statements have repeatedly indicated that members do not foresee raising the target federal funds rate for a “considerable period” after the QE asset purchases cease. Wednesday’s FOMC statement reasserted this position, and said that the committee may keep the current target federal funds rate at its current level for “some time” after employment levels and inflation reach normal levels.

Committee member and Philadelphia Federal Reserve Bank President and CEO Charles I. Plosser objected to use of the term “considerable period” as being “…time dependent and not reflecting economic progress made toward the committee’s goals.”

The committee’s comments about asset purchases and the target federal funds rate included the usual reminder that asset purchases and determination of the target federal funds rate are not on a predetermined course and are subject to adjustment should economic conditions merit changes in FOMC monetary policy.

FOMC Concerned with Housing Markets, Unemployment

The committee’s statement said that while FOMC members noted improvements in labor markets, but the unemployment rate remains elevated. The FOMC statement noted that “a range of labor market indicators suggest that there remains significant underutilization of labor resources.”

In spite of encouraging labor market reports, FOMC members remain concerned about overall labor market conditions, and are not relying on the national unemployment rate alone as an accurate measure of labor market health.

Home prices continue to rise, but at a slower pace in many areas. On a positive note, the statement indicated that FOMC members found that the likelihood of inflation running consistently below the committee’s target rate of 2.00 percent was “diminished somewhat.”

While Wednesday’s FOMC statement reflected signs of an ongoing economic recovery, it’s evident that FOMC members plant to keep a close eye on factors that impact their expectations for the economy.

S P Case-Shiller Home Price Index: May Home Prices Rise

S&P Case-Shiller Home Price Index: May Home Prices RiseMay home prices rose in all 20 cities tracked by the S&P Case-Shiller 20 City Home Price Index. This was the second consecutive month in which all cities posted gains.

On average, national home prices rose by 1.10 percent in May as compared to April’s reading. Year-over-year, home prices rose, but at a slower rate of 9.39 percent in May as compared to 10.80 percent year-over-year for April.

Nevada, Florida and California Cities Post Highest Gains 

Cities posting the highest year-over-year price gains in May included Las Vegas, Nevada at 16.90 percent, San Francisco, California at 15.40 percent, Miami, Florida at 13.20 percent. San Diego and Los Angeles, California reported home price growth rates at 12.40 and 12.29 percent respectively.

According to the 20-City Index, home prices are 18 percent below their peak reached in mid-2006, but are 27 percent higher as compared to March 2012 lows.

Pending Home Sales Decline in June

More evidence of sluggish home sales was reported for June. The National Association of REALTORS® reported that pending home sales dropped by 1.10 percent in June. This was a surprise as compared to May’s month-to-month gain of 6.00 percent for pending sales.

Several factors were cited as contributing to slower home sales; higher home prices, stagnant wage growth, higher mortgage rates and stringent loan requirements were seen as obstacles for home buyers. Pending home sales are an indicator of future closings and mortgage activity. Approximately 80 percent of purchase contracts signed sales completed within 60 days.

FHFA House Price Index: Home Price Growth Slips in May

FHFA, the agency that oversees Fannie Mae and Freddie Mac, reported that home prices grew by 0.40 percent in May to a seasonally-adjusted year-over-year rate of 5.50 percent as compared to April’s year-over-year reading of 5.90 percent. FHFA’s House Price Index is based on sales of homes connected with Fannie Mae and Freddie Mac mortgages. 

On a positive note, the reading for the Consumer Confidence Index jumped from 85.20 in June to 90.90 in July. Expanding consumer confidence suggests that more families may decide to transition from renting to owning their homes, and that homeowners may feel confident enough to move up to larger homes.

 

Sellers, Beware: Five Reasons You Might Not Get Top Dollar when You Sell Your Home (And How to Avoid Them)

Sellers, Beware: Five Reasons You Might Not Get Top Dollar when You Sell Your Home (And How to Avoid Them)For most people, their home is their largest asset, so they want to maximize that asset by getting top dollar when they sell. Here are a few reasons you might not get top dollar when you sell – and how to avoid them!

Selling At The Wrong Time

From early spring to late summer is home-buying season for most people, especially those with children. Putting your house on the market during this period is when you are likely to get top dollar for it. Early fall is also a good time to list your home. Winter – especially December – is the worst time to list. If you list your home outside of prime selling season, you are likely to get less for it than you could have otherwise.

Not Staging Your Home Properly

Many people think of staging as simply rearranging the furniture or changing curtains, but there is so much more to it, and not doing it properly can mean less money for your home. To stage your home properly, you must declutter, putting knick-knacks and family pictures away. You also want to make sure your home is as clean as possible and that you correct any defects such as holes in the wall or cracked window panes. Another thing you should do as part of your staging routine is to paint your walls in neutral colors and update cabinet hardware and light fixtures that are out of date. These little changes can make a big difference. 

Not Paying Attention To Curb Appeal

You can spend all the time and money necessary to spruce up the inside of your home, but if your lawn is a patch of dirt and your gutters are falling down, all that work and money can go for naught. To get top dollar for your home, you need to improve your curb appeal. This includes seeding or sodding bare spots in your lawn, trimming trees and shrubbery and fixing up home-related items such as broken concrete and sagging gutters.

Not Getting The Price Right

You might think that to get the highest price out of your house, you have to price it high. However, that’s not necessarily always the case. If you price your house too high, it can make other similar houses that are priced lower look like better deals. You should make sure to pay close attention to what comparable homes are selling for in the area and price your home accordingly.

Not Working With A Real Estate Agent

Many people think they can save a bundle selling their home by not working with a real estate agent. While you do save on the real estate commission, you can lose more than that amount by making mistakes in pricing and marketing. A real estate agent will have access to resources you don’t, such as information on buyers looking in your neighborhood. An agent will market your home, make sure it is priced accordingly and set up showings. It is worth your time and money to call an agent experienced in selling homes in your neighborhood who can give you a market evaluation.

What’s Ahead For Mortgage Rates This Week – July 28, 2014

Home cooling costsLast week’s economic news brought several housing-related reports, which indicated varying results in terms of gauging the economic recovery. FHFA reported slower growth of home prices associated with Fannie Mae and Freddie Mac mortgages, but sales of existing homes as reported by the National Association of REALTORS® surpassed expectations and May’s reading. Sales of new homes slumped to their lowest level in three months. Weekly jobless claims were lower than expected and also lower than for the prior week.

FHFA Home Prices Grow at Slower Rate, Existing Home Sales Higher than Expected 

The Federal Housing Finance Agency (FHFA) reported that the average sale price of homes associated with mortgages owned or backed by Fannie Mae and Freddie Mac grew by.40 percent in May with year-over year growth of 5.90 percent. While national home price readings continue to rise, they are doing so at a slower pace since 2013′s rapid appreciation of average home prices.

Sales of previously owned homes reached their highest level in eight months in June. Existing home sales surpassed expectations and May’s reading in June, with sales of pre-owned homes at a seasonally adjusted annual rate of 5.04 million units. Analysts forecasted sales of existing homes at 5.00 million against May’s reading of 4.91 million existing homes sold.

New Home Sales Fall Short in June

New home sales did not achieve the expected volume for June. The reading of 406,000 new homes sold was less than the expected reading of 475,000 new homes sold. Projections were based on the original May reading of 504,000 new homes sold, but this was downwardly revised to 442,000 new homes sold in May. Builders were said to be cautious about over-extending themselves are focused on new home construction in high-demand areas where home prices are higher. Homes are less affordable in such areas, which impacts lower sales volume.

Freddie Mac: Mortgage Rates Steady for 30-year FRM

The average rate for a 30-year fixed rate mortgage was unchanged at 4.13 percent with average discount points also unchanged at 0.60 percent according to Freddie Mac’s weekly survey of mortgage rates. The average rate for a 15-year fixed rate mortgage rose by three basis points to 3.26 percent with discount points higher at 0.60 percent. The average rate for a 5/1 adjustable rate mortgage was two basis points higher at 2.99 percent with discount points ten basis points higher at 0.50 percent.

Weekly Jobless Claims Lowest since 2006

A major consideration for home buyers is stable employment. Recent reports suggest that the labor market is expanding; the Weekly Jobless Claims report continued this trend with a lower than expected reading of 284,000 new jobless claims filed against expectations of 310,000 new claims and the prior week’s reading of 303,000 new jobless claims. Analysts found the declining number of new jobless claims consistent with lower unemployment rates, but cautioned that sustained weekly jobless claims readings lower than 300,000 are more consistent with a national unemployment rate of 5.00 percent or less.

What’s Ahead

This week’s scheduled economic news will add further insight to housing market trends with the release of Pending Home Sales for June and the Case-Shiller Home Price Index report for May. The Bureau of Labor Statistics will also release July’s Non-Farm Payrolls report and National Unemployment report. The Federal Reserve is set to release its customary statement in the aftermath of the Federal Open Market Committee (FOMC) meeting that concludes on Wednesday.

The 7 Most Unaffordable Cities for Real Estate in the USA (And 3 Affordable Gems!)

The 7 Most Unaffordable Cities for Real Estate in the USA (And 3 Affordable Gems!)As prices continue to rise across the board with everything from food to gas, it’s no wonder that real estate prices are high in many cities across the USA. While this is the case for a large number of cities, there are also certain areas in which prices are decidedly low. Here’s a small look at the most affordable and unaffordable cities within America.

The Seven Most Unaffordable Cities

Oakland, CA – Though Los Angeles and San Francisco are 2 California cities that may first come to mind, Oakland is also highly expensive when it comes to real estate, with a median home value of nearly $450,000, which is over 100 percent more than the national average.

Los Angeles, CA – Los Angeles is another city in California that is particularly unaffordable. With a median household income of just under $50,000, the exceedingly high median home value of nearly $470,000 is largely galling in its expensiveness.

Boston, MA – The Boston real estate market becomes more unaffordable with each passing year. The median home value within the city is set at well over $350,000. This, combined with the relatively high cost of living, can make for a bleak outlook.

New York City, NY – As one of, if not the most, unaffordable cities in America, NYC is also the most populous city in the country. While the borough of Manhattan is the most expensive for real estate prices, Brooklyn and Queens aren’t much better, while the median home value of the entire city is just over $500,000.

Washington, D.C. – Though the median household income within the city of Washington D.C. is higher than the national average, the median home value sits at a substantial $443,000, with a cost of living over 40 percent above the national average.

San Francisco, CA – Living in San Francisco is extremely unaffordable, though mitigated a bit by higher household incomes. The median home value is likely the highest in the nation, at just over $750,000.

Honolulu, HI – As the capital city of Hawaii, Honolulu is much higher than the national average in everything from utilities to transportation, with the median home value sitting at $547,000.

Three Affordable Alternatives

Cleveland, OH – Though there are a surprising amount of affordable cities in Ohio, Cleveland has a median home value of just over $75,000, well below the state average of $129,000.

Knoxville, TN – Knoxville is a city in Tennessee that combines a generally low median home value of $140,000 with a median household income of just over $60,000, which is much higher than the national average.

Syracuse, NY – If you want to live in New York, but can’t afford the high real estate prices of NYC, the city of Syracuse has a low median home value of just under $80,000.

Can One Missed Mortgage Payment Affect Your Credit Rating? Yes! Here’s What to Do if You Miss One

Can One Missed Mortgage Payment Affect Your Credit Rating? Yes! Here's What to Do if You Miss OneMost people don’t know whether or not a single missed mortgage payment can have serious consequences for their credit score.

The good news is that there are things that can be done to mitigate the damage and help anyone who has missed a payment repair their credit. What are some options to help homeowners get back in the good graces of their creditors?

Own Up To The Mistake

The best thing to do is to admit that the payment was missed and immediately make amends for it. For the most part, mortgage lenders are sympathetic to the fact that people miss payments for reasons that may be beyond their control.

By calling the lender as soon as it appears that a payment may be late or not forthcoming at all, it is easier to make arrangements to roll that payment back into the mortgage or take other steps to decrease the odds of a negative remark being made on a credit report.

Don’t Let A Single Missed Payment Turn Into Multiple Missed Payments

While a single missed payment can hurt a credit score, it is important to not compound the mistake by missing more payments. In some cases, someone may decide to make up for the late payment before making any further payments.

However, that only makes the mistake worse because a borrower will be considered late on all subsequent payments. It is better to make the most current payment on time and make the late payment the secondary priority.

Hire A Third-Party If Necessary To Negotiate A Loan Modification

It is important to not let emotion get in the way of negotiating a modification to a mortgage. When a borrower hires a credit counselor or a bankruptcy attorney to talk his or her creditors, the negotiations can stay professional and on topic.

In most cases, a lender will be willing to make modifications for those who need them because it is better to get the money from the borrower willingly instead of having to go through a foreclosure proceeding.

While a missed mortgage payment can be bad news for a credit score, it is possible to make amends for the missed payment while minimizing long-term damage to a borrower’s credit score. By owning the mistake, staying current on all future payments and working with a third-party, it may be possible for a lender to forget that the missed payment ever happened.

What’s Ahead For Mortgage Rates This Week – July 21, 2014

Mythbusters: 5 Reasons Why Diet Sodas Might Not Be as Healthy as You ThinkLast week’s economic news offered a variety of indications that the economic recovery continues, but some readings missed their expected levels. The Philadelphia and New York branches of the Federal Reserve Bank reported higher than anticipated manufacturing for their respective regions and new jobless claims were lower than expected.

Fed Chair’s Senate Testimony Hints at Coming Interest Rate Hike

Federal Reserve Chair Janet Yellen testified that the Fed might have to raise interest rates sooner than expected if the economy continues to outperform the Fed’s projections. Ms. Yellen said that the central bank presently estimates that the first rate increases will take place approximately one year from now.

The Federal Open Market Committee (FOMC) of the Fed has repeatedly stated that members will continue to review data and economic conditions changing monetary policy. Ms. Yellen said in last week’s remarks that this holds true whether economic conditions improve or decline.

In other Fed-related news, the Philadelphia Fed released its manufacturing index for July with higher than expected results. The Philly Fed’s reading for July was 23.90 as compared to expectations of 16.50 and June’s reading of 17.80.

The New York Fed reported a similar trend for July with a reading of 25.60 as compared to an estimated reading of 17.50 and June’s reading of 19.30. This is good news after the Northeast’s economy was slammed by severe weather last winter. Weather conditions stalled area housing and labor markets.

Weekly jobless claims were lower at 303,000 than expectations of 310,000 new jobless claims and the prior week’s reading of 305,000 new jobless claims.

Home Builders Post Positive Confidence Reading for July

The National Association of Home Builders posted its highest builder confidence reading in six months for July with a reading of 53 against the expected reading of 50 and June’s reading of 49. Numbers above 50 indicate that more builders surveyed have a positive outlook than not.

Housing Starts for June were reported lower than expected at an annual level of 893,000 against an expected reading of 1.02 million and May’s reading of 985,000 housing starts.

Mortgage Rates Lower

According to Freddie Mac’s weekly survey, average mortgage rates were slightly lower last week. The average rate for a 30-year fixed rate mortgage fell by two basis points to 4.13 percent. Discount points were 0.60 as compared to the prior week’s reading of 0.70 percent. The average rate for a 15-year fixed rate mortgage was 3.23 percent as compared to the previous reading of 3.24 percent.

Discount points for a 15-year mortgage averaged 0.50 percent against the prior week’s reading of 0.50 percent. The average rate for a 5/1 adjustable rate mortgage dropped by two basis points to 2.87 percent with discount points unchanged at 0.40 percent.

The University of Michigan’s Consumer Sentiment Index for July fell just short of expectations at 81.3. Analysts expected a reading of 83.0, based on June’s reading of 82.50. Analysts said that although labor markets are improving, consumers continue to face rising costs for gasoline and food, which likely explained the dip in confidence for July.

What’s Ahead

This week’s economic news releases include Existing Home sales from the National Association of REALTORS®, New Home Sales from the Department of Commerce and the FHFA House Price Index. The Chicago Fed is set to release its National Activity Index. Freddie Mac mortgage rates and New Jobless Claims will be released Thursday as usual.

Buying a House or Condo? Why the Home Inspection Process is One You Won’t Want to Skimp On

Buying a House or Condo? Why the Home Inspection Process is One You Won't Want to Skimp OnOnce you have found that perfect home with the right price and every little feature you were hoping for, it’s important to keep in mind that the home has been presented in a way that accentuates its highlights and shadows any flaws. For this reason, it is crucial that you get a home inspection before completing a purchase.

Many sellers also have inspectors investigate the home in order to determine its sale value. As such, they should be aware that a prospective buyer will want to request an independent inspection to verify the findings.

Reasons For Home Inspections

If you are the one purchasing the home, getting an inspection is likely to be the most important investigation you need to perform to ensure you are getting the best value. It can also help to know what reasons each party has for requiring a home inspection.

Buyers, for example, feel peace of mind knowing the home in question is safe. They also gain the ability to negotiate in the event a problem arises from inspection, or they can request repairs first. They can also opt out if the problems that arise are too overwhelming to deal with prior to or after the purchase. Finally, buyers can learn about the kind of maintenance and upkeep be required for the home in the long run.

Sellers, on the other hand, want to make the transaction as smooth of a process as possible to prevent issues that could slow down the sale. They can also learn about any problems they need to repair before putting the house on the market, and they can determine the sale price for the transaction. Lastly, this allows the seller to prove their transparency by having an inspection report available, even though he or she should expect that the buyer should be requesting an independent home inspection regardless.

It should be evident, having an inspection conducted is vital for buyers and sellers alike; though the price might seem costly at first, it is merely a small fee that is well worth the effort to solidify a home purchase.

Finding A Home Inspector

The first thing to keep in mind is that most states lack a licensing process for those who inspect homes. If your state does not have such criteria, finding an inspector in good standing with a nationally recognized organization can help as well.

It is very important not to take a seller’s inspection report at face value, no matter what kind of reputation they may have as a person. You might not even want to accept an inspector that someone else hires since they may have a vested interest that can influence the report.

Keep in mind that a general inspector is not typically licensed to check for specific issues like gas or pests. As such, you will need to either seek someone who is licensed for a full inspection or specificaly request inspection for pests, especially for those in high risk areas. 

An Insider’s Guide to Reducing Your Remaining Mortgage Years Through a Smart Refinance

An Insider's Guide to Reducing Your Remaining Mortgage Years Through a Smart RefinanceIs it always the best idea to pay off a mortgage over 30 years? While it may help a homeowner lower his or her monthly payment, it can mean paying more in interest and waiting several more years to build sufficient equity in the home.

The question is…how can a homeowner reduce the amount of time it takes to pay off a mortgage by refinancing his or her loan? A few methods for reducing your mortgage term are explained below.

Refinance From A 30-Year Mortgage To A 15-Year Mortgage

For those who don’t want to wait any longer than necessary to pay off their home loan, it may be possible to refinance to a shorter-term mortgage. Instead of taking 30 years to pay off the loan, a homeowner can opt to pay off the loan in 10 years or 15 years. The shorter the term, the less interest will be paid on the loan.

Get A Lower Interest Rate With A Shorter-Term Mortgage

Another good reason to shorten a mortgage term is because it could lower the loan’s interest rate. Instead of paying 4.5 percent over 30 years, it may be possible to pay 4 percent over 15 years. This gives the mortgage holder the chance to build equity in the home faster as they are paying more of the principal balance with each payment. While a mortgage holder can pay more than the minimum amount on a longer-term mortgage each month, it could still end up costing more overall due to the terms of the loan. Be sure to ask your mortgage professional about your options here.

Stop Paying Mortgage Insurance

Those who are paying mortgage insurance could be paying $200 or more per month for nothing more than the right to protect the lender against default. Homeowners who could qualify for a conventional loan should attempt to refinance to a conventional loan if possible to avoid making this payment. Instead of going toward mortgage insurance, put that money toward the principal balance on the loan. There are, of course, risks involved with this approach so be sure to fully discuss them with a professional.

How Can Someone Refinance A Loan?

Now that you know how to pay off your mortgage faster through a refinance, how can someone go about refinancing a home loan? Fortunately, refinancing is similar to the process of securing the home’s first loan. All a borrower will need to do is find a lender that he or she wants to work with, find an offer that works for that borrower and then close on the deal. Although there may be closing costs associated with the new loan, some lenders may be willing to waive some or all of them on a refinance.

Paying off a mortgage as soon as possible can help a borrower save money while building equity in the home at a faster pace. This gives a homeowner financial strength as well as the flexibility to sell the house in the future without worrying about losing money in the deal. To find out more about refinancing options, talk to a mortgage lender.

How Much is Your Home Worth in Today’s Market? Three Key Tips for Assessing Value

How Much is Your Home Worth in Today's Market? Three Key Tips for Assessing ValueIf you’re thinking about putting the house on the market, or are simply curious about its value in the current economic atmosphere, it’s essential to get an honest assessment of its value. An overly inflated figure won’t hold up and will only turn potential buyers away.

It’s best to get a fair assessment in order to ask a reasonable price or avoid over-extending oneself when it comes to taking out a home equity loan. Consider these three key tips to get a true assessment of a home’s value.

Identify Positive Features About The Home And Property

When seeking an appraisal for a home, it’s important to look at the big picture. While the neighborhood and specific location are important, as well as the size and condition of the home, it’s also essential to tally up any improvements or upgrades. Any recent renovations are a plus that are sure to give a boost to a home’s value. Outbuildings and swimming pools add more positives that will increase the initial value of a home. The most important thing any homeowner can do is to stay on top of repairs and give the property a facelift periodically to keep things fresh. This will be taken into consideration during an appraisal.

Pay Attention To The Competition

Whether homeowners try to estimate their home’s value on their own or bring in the professionals, it’s important to pay attention to the surrounding real estate. Take a close look at other properties in the area and their price tags when they come up for sale. It’s especially helpful to look at properties that compare in size and condition. From that point, the most expensive and least expensive homes should be tallied as well, providing a price range for the concerned individual’s home.

Think About Present Circumstances

Be sure to consider if the area is in a recession or showing a period of strong economic growth. If a home is located in an area that is booming, this will inflate the value of the home. It is all part of the law of supply and demand. When buyers are coming in droves, home sales will be ripe for the picking and homeowners can ask a higher price. However, if the population is dwindling and people are migrating elsewhere because job opportunities have fallen, there is a much greater chance that the home’s value will decrease. For those who want to sell, the best bet is to strike when the iron is hot and put the house on the market during a period of economic strength. If the economy is failing, it may be necessary to wait or cut ones’ losses.

Act Now To Learn More

There is no better time than the present to contact a name you can trust in real estate. Discover all the ins and outs of assessing your home’s value, discuss your options, and find out ways to boost your property’s potential as you seek a reliable assessment.