Freddie Mac (OTCQB: FMCC) today released the results of its Primary Mortgage Market Survey® (PMMS®), showing mortgage rates moving lower for the third consecutive week amid another week of market turbulence.
News Facts
30-year fixed-rate mortgage (FRM) averaged 3.81 percent with an average 0.6 point for the week ending January 21, 2016, down from last week when it averaged 3.92 percent. A year ago at this time, the 30-year FRM averaged 3.63 percent.
15-year FRM this week averaged 3.10 percent with an average 0.5 point, down from 3.19 percent last week. A year ago at this time, the 15-year FRM averaged 2.93 percent.
5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 2.91 percent this week with an average 0.5 point, down from last week when it averaged 3.01 percent. A year ago, the 5-year ARM averaged 2.83 percent.
Average commitment rates should be reported along with average fees and points to reflect the total upfront cost of obtaining the mortgage. Visit the following link for theDefinitions. Borrowers may still pay closing costs which are not included in the survey.
Quote Attributed to Sean Becketti, chief economist, Freddie Mac.
“The Freddie Mac mortgage rate survey had difficulty keeping up with market events this week. The 30-year mortgage rate dropped 11 basis points to 3.81 percent, the lowest ratein three months. This drop reflected weak inflation — 0.7 percent CPI inflation for all of 2015 — and nonstop financial market turbulence that is driving investors to the safe haven of Treasuries. However, the survey was largely complete prior to Wednesday’s Treasury rally that drove the yield on the 10-year Treasury below 2 percent, down 29 basis points since the end of 2015.”
Will another housing bubble bring down the U.S. economy?
Nearly a decade after the peak of the American real estate bubble, there’s no shortage of fear that we’ll repeat the whole nightmare again.
For years now, economy watchers have fretted over the run up in student loan debt, while more recently the collapse in junk bond prices had analysts drawing paralells to what happened in the subprime mortgage market in 2008. Legendary investor George Soros this week was quoted as saying the upheaval in China’s financial markets reminds him of the “crisis we had in 2008,” The Sunday Times in Sri Lankareported on Thursday.
But what if the next crisis isn’t just similar to the last one, but a word-for-word rip-off? That’s what a viewer of Quicken Loans’ latest ad for its new mortgage product, Rocket Mortgage, might just think. The tagline is, after all, “push button, get mortgage.”
After seeing that video (or an ad for the product on Fortune.com), you might be forgiven for having flashbacks to the last crisis. Meanwhile, competitors like Guaranteed Mortgage have resorted to hiring celebrities like Extreme Makeover Home Edition host Ty Pennington to pitch its online lending products.
But a hard look at the numbers should convince you that mortgage lenders aren’t handing out loans like a dentist giving out toothbrushes. Lending standards have come down a bit, but they remain tighter than they were before the mid-2000s bubble began inflating, and seemingly qualified buyers are still complaining about getting shut out of the real estate market.
For its part, Quicken Loans President and CMO Jay Farnar argues that products like Rocket Mortgage enable his firms to improve the quality of its lending, because it enables a more efficient collection of consumer data that helps make underwriting more robust.
Meanwhile, mortgage originations have remained flat for the past two years, and lenders are giving out fewer mortgages today then they were in 2012, when the housing recovery was just getting underway, according to data from the Mortgage Bankers Association.
In other words, it doesn’t look like irresponsible mortgage lending is inflating real estate prices beyond their fundamentals, but that doesn’t mean another form of capital won’t. That’s what housing analyst Marc Hanson has been arguing for sometime now. Housing prices, he contends, are about 25% to 60% above what the fundamentals of the U.S. economy can justify, but the market is being propped up by “unorthodox. . .incremental demand using unorthodox capital.”
This time around the unorthodox capital isn’t coming in the form of international investors piling money into the U.S. mortgage bond market, creating a doomsday machine that cranked out home loans with very little scrutiny, but from domestic institutional investors, folks buying second and third homes and serving as landlords, and foreign buyers stowing cash in American real estate.
Before you can repair concrete, you have to know what caused the problem in the first place. Here is advice on troubleshooting the damage and coming up with the best concrete repair solution.By Bill Palmer, ConcreteNetwork.com Columnist
Concrete surfaces are constantly under attack by the elements resulting in the need for repairs. Accuflex Coatings
When I was in college I had a job doing maintenance in a downtown Denver hotel. I didn’t really know what I was doing but most things weren’t that hard to figure out. One time, though, I needed to repair a broken up concrete door threshold. I removed the old concrete and went down to the hardware store and bought a bag of premixed concrete. I added the amount of water the bag said to use (maybe just a little extra for good luck) and poured it in and troweled it off-another job well done!
But no! Two weeks later my boss called me into his office. Seems he had just gone past my repair work and found it as cracked up as the original threshold. I was so disappointed! We went back to the scene of the crime to do some actual investigation in advance of launching off on another repair attempt. While we were standing there, one of the kitchen workers came through with a heavy hard-wheeled dolly loaded with supplies that dropped onto the threshold as he passed: we knew the cause of the problem. For the next repair, we added reinforcing steel, used higher strength concrete, and eliminated the drop-off onto the threshold. When I left a year later, the new threshold was still working well.
I took away a good lesson-one that I soon found applied to just about any repair work. Before you can repair anything you have to know what caused the problem in the first place and you have to understand how it is supposed to work. Only then can you make an intelligent decision on how to do the repair.
With any concrete repair, take that lesson to heart and you’re off to a great start. First figure out what caused the damage, do the necessary preparation of removing any unsound concrete and contamination, then install a repair designed to solve the problem. The worst thing you can do is make a repair that doesn’t last. Someone once told me that over 50% of concrete repairs fail again within two years. That is not a track record that inspires confidence.
So let’s start by evaluating the problem and then we can decide how we are going to make a durable repair. This article is only a very superficial treatment of this subject. For more details, the best source is either the International Concrete Repair Institute or the American Concrete Institute. ICRI, in conjunction with ACI, publishes the Concrete Repair Manual which is over 2000 pages long.
Housing starts in Canada decreased to a seasonally adjusted annualized rate of 172,965 units in December of 2015 from an upwardly revised 212,028 units in November and well below market expectations of 200,000 units. Urban starts dropped 19.1 percent to 159,007 units. The multi-unit segment shrank 27 percent to 101,264 units while the single-detached segment held steady at 57,743 units. In December, urban starts decreased in the Prairies, Ontario, and Atlantic Canada, but increased in British Columbia and Québec. Rural starts were estimated at a seasonally adjusted annual rate of 13,958 units. Housing Starts in Canada averaged 183.42 Thousand from 1977 until 2015, reaching an all time high of 291.60 Thousand in March of 1978 and a record low of 90.70 Thousand in August of 1982. Housing Starts in Canada is reported by the Canada Mortgage And Housing Corporation.
Last year, 66-year-old Lauren Knoblauch sold or donated nearly everything she owned, from her two-bedroom home on a suburban Seattle lake to her furniture and many of her clothes. She moved everything else, two small carloads’ worth, into her new home: a downtown apartment that, at less than 150 sq. ft., is smaller than the average U.S. master bedroom.
The move came as Knoblauch, who works in inmate rehabilitation, pondered her impending retirement. “I started thinking about what I was passionate about,” she said. “I wanted to see opera in Europe, to spend money on what was exciting to me.”
Her new apartment, which costs $575 a month — less than half the $1,400 average for a Seattle one-bedroom — puts her about 20 minutes from Symphony Hall by foot and a short bus ride from the Opera House. With new financial flexibility, she’s traveled to Germany and Ireland to see opera performances. “I’m loving it,” she says.
The burgeoning tiny house and micro-apartment movements, which generally describe accommodations smaller than about 400 sq. ft., are sometimes seen as young person’s trends, with budget- and environmentally conscious millennials and Gen Xers seeking to slash living costs while lessening their environmental footprints. Some familiar with the industry, however, say they are increasingly of interest to older people at or nearing retirement age.
About 10,000 people live in tiny houses in the U.S. — the Pacific Northwest, Colorado and the Carolinas are particularly popular areas — though just a fraction are older; many more people, especially those in expensive cities, live in micro-apartments, according to Ryan Mitchell, owner of the website TheTinyLife. Their numbers are growing, he says, as modifications that make the homes more accessible to older residents, such as staircases rather than ladders and designs that keep everything easily reachable, become more commonplace. Visit CentralPennContracting.com for more new trends.
While their appeal is varied, the principal attraction is price. Smaller homes can give seniors “more disposable income and the ability for many to comfortably survive within their Social Security means and/or part time work,” says consultant Erik Blair, a tiny house advocate. “The number one reason to get into a tiny house: You can save 70% or more of your recurring cost of living.” It is times like these when one needs to be completely aware of theor social security standing and the benefits that can be reaped out of it. The social security office exists for the same reason, where answers for any queries related to it are provided along with a host of services. Such offices have been dispersed widely across the States, and so, residents living in Michigan may redirect themselves to the Michigan Social Security Card office locations.
Why older Americans want to retire in tiny houses
For older Americans, many on fixed incomes that may not heavily supplement their Social Security, the cost of living is of utmost importance. Nearly 60% of workers 55 and older have saved less than $100,000 for retirement, while 24% have saved less than $1,000, according to the nonprofit Employee Benefit Research Institute. Both figures are much lower than financial advisers recommend.
Enter tiny houses, which are relatively inexpensive to build, buy and maintain. It usually costs between $10,000 and $100,000 to buy or build one, according to Blair; the average U.S. home costs nearly $200,000. Tiny apartments tend to cost much less than larger rental units in the same area.
In both cases, less space means lower utility payments: Mitchell, who lives in a 150 sq. ft. home, says his average monthly bills are around $20.
Less storage space, meanwhile, can reduce the impulse to acquire new stuff because, simply put, there’s nowhere to put it. “When I want to buy something, I have to think of what can I get rid of,” said Knoblauch. Often, “I realize I have everything I need already.”
“There are no big trips to Sam’s to get tubs of ketchup,” joked Kerri Fivecoat-Campbell, 52, who lives in a 480-square-foot home in the Ozark Mountains in Arkansas, where she plans to retire, after years in a larger house in suburban Kansas City, Kan. “They won’t fit.”
Money isn’t the only reason tiny houses and micro-apartments appeal to retirees. Many empty nesters long to downsize, surveys show, even if they can afford more space. With their children grown, extra rooms can attract clutter and require maintenance like plumbing that is rather costly thing (check out these causes of plumbing damage to prevent them); some, anticipating an eventual move to a nursing home, like the idea of simplifying early.
“I used to spend an entire Saturday cleaning my house,” said Fivecoat-Campbell. “Now I can clean it top-to-bottom in under two hours.”
For still others, the houses allow them to live near family while retaining their own space. So-called “granny cottages” can be placed in the yard of a family’s home, allowing residents to live both independently and close by. They’re often fitted with amenities useful to older residents, including grab bars, barrier-free showers and elevated toilets that can reduce falling risks, and wheelchair access.
‘I love this place — life works’
Tiny-house living isn’t without challenges. Knoblauch doesn’t have a full kitchen or bathtub; she has just one sink; and her clothes hang on a free-standing rack rather than in a closet. Fivecoat-Campbell wishes she had space for her now-deceased mother’s china cabinet and other full-size furniture.
“It is important to recognize that 2016 is shaping up to be the best year in recent memory to sell. Supply remains very tight, so inventory is moving faster. Given the forecast that price appreciation will slow in 2016 to a more normal rate of growth, delaying will not produce substantially higher values, and will also see higher mortgage rates on any new purchase,” wrote Realtor.com Chief Economist Jonathan Smoke recently.
Should his sage advice to sellers fall on deaf ears, 2016 could produce one of the most miserable housing market in years. After seven years of struggle, the issue no longer is demand, it’s supply. Anemic inventories are artificially driving up prices that keep first-time buyer trapped in rentals, which as expect to soar again this year.
Home sales prices have risen between 15 and 20 percent over the past three seasons, depending on which series you believe. We’re less than 18 months away from reaching a national median sales price that’s higher than the very highest peak at the very top of the housing bubble in 2006.
Frozen stiff without enough equity to sell for nearly decade, owners at last have made it to the light at the end of the tunnel. They can sell and cash out. They can refi or take out a HELOC and stay put. Moreover, with experts predicting that sale prices will moderate in 2016 to 4-5 percent appreciation from 6 percent as the market slow down to catch, this could be the perfect year to sell.
With the clock ticking on the opening of the 2016 season, now is the time potential sellers are making up their minds to sell or not.
Fannie Mae
In Fannie Mae’s December Home Purchase Sentiment Index, Fewer than half of respondents in Fannie Mae’s survey of consumers said it’s a good time to sell (49 percent) and 41 percent said it’s a bad time to sell. Not exactly a strong endorsement but at least movement in the right direction. The best thing about the findings was that in November the sentiment to sell was even lower—48 percent said it was a good time and percent and 44 percent said it was a bad time.
The long anticipated slowdown in rent increases from record numbers of new multi-family projects opening for business has yet to materialize as rental demand drove rents to record levels in the first three quarters of 2015, sending the national apartment market soaring to its strongest year in a decade.
According to data from Axiometrics, a specialist in apartment market research and analysis:
Annual effective rent growth of 4.7% in the fourth quarter of 2015represented a 7-basis-point (bps) increase from the figure of one year earlier (also rounded to 4.7%), though it was 35 bps lower than the 5.2% of the third quarter of 2015. The fourth-quarter rate is the highest year-end figure since 2005, when effective rent growth was 5.8%.
Rent growth has been 4.7% or above for five straight quarters, even though a three-quarter streak of at least 5.0% growth was broken. Never in Axiometrics’ 20-year history has annual effective rent growth been at 4.7% or above for such a long period.
Quarter-over-quarter effective rent growth was -0.6% in the fourth-quarter, continuing a trend of negative rent growth at the end of the year. That rate was a 32-bps decrease from the 0.3% reported in 4Q14 and marked the only quarter of 2015 in which the rent-growth rate decreased from the corresponding quarter of 2014. It should be noted that quarter-to-quarter rent growth is normally negative in the fourth quarter due to seasonality.
Average national rent was $1,244 for the fourth quarter of 2015, a $54 increase from the average of $1,188 in the fourth quarter of 2014.
QUARTERLY EFFECTIVE RENT GROWTH
Quarter
2012
2013
2014
2015
First
0.6%
0.4%
0.5%
0.9%
Second
2.2%
2.1%
2.7%
2.7%
Third
1.3%
1.2%
1.7%
2.0%
Fourth
-0.6%
-0.9%
-0.3%
-0.6%
Source: Axiometrics Inc.
“Quarters 1-3 were the most robust period we have seen since before the Great Recession,” said Jay Denton, Axiometrics’ Senior Vice President of Analytics. “Much of the fourth-quarter moderation can be attributed to several Western markets that experienced double-digit rent growth for most of the year but could not sustain that pace.”
Existing-home sales dropped off considerably in November to the slowest pace in 19 months, but the National Association of Realtors said some of the decrease was likely due to the “Know before you owe” or the TILA-RESPA Integrated Disclosures rule (TRID), which took effect October 3. The rule requires lenders and service providers to provide binding estimates and final accounting of closing costs before closings take place.
Total existing-home sales fell 10.5 percent to a seasonally adjusted annual rate of 4.76 million in November (lowest since April 2014 at 4.75 million) from a downwardly revised 5.32 million in October. After last month’s decline (largest since July 2010 at 22.5 percent), sales are now 3.8 percent below a year ago – the first year-over-year decrease since September 2014. Four major regions saw large sales declines in November.
November also marked the second straight month home sales have fallen on a monthly basis. In October, home sales fell 3.4 percent to a seasonally adjusted annual rate of 5.36 million in October from 5.55 million in September but were still 3.9 percent above October 2014.
Lawrence Yun, NAR chief economist, said “Sparse inventory and affordability issues continue to impede a large pool of buyers’ ability to buy, which is holding back sales,” he said. “However, signed contracts have remained mostly steady in recent months, and properties sold faster in November. Therefore, it’s highly possible the stark sales decline wasn’t because of sudden, withering demand.” Yun said the longer timeframes anticipated by the new rule pushed some closings into December.
However, most reports of TRID implementation show the new rule is having minimal impact.
According to a survey by Campbell Surveys found that the total average closing time including delays for most loan types stayed relatively level or showed only a slight increase between September and October.
“While there was apprehension about TRID, so far impacts are minor,” said Tom Popik, research director of Campbell Surveys. Popik noted that measuring the effects of TRID is still in the early stages as many more TRID-compliant transactions are scheduled to close this month.
Fourteen years ago, improving minority homeownership was front burner issue. In 2002, the Bush Administration even set a goal of expanding the number of minorities who owned their own homes by 5.5 million—approximately the number of existing homes sold in a very good year.
The subprime crash and housing depression put a sudden end to that effort. Minority homeownership plummeted and, surprisingly, never achieved the attention from top policy makers in two Obama administrations that it enjoyed under their predecessor.
For homeownership in general, the housing depression was depressing. For minorities, it was a disaster. For African-American households, the homeownership rate peaked at 49.4 percent in 2004 and bottomed out at 41.9 in the first quarter of this year, a decline of 7.5 points. Hispanic American homeownership reached a high of 49.8 percent in 2006 and fell to 44.1 percent in the first quarter of this year, down 5.7 points. By comparison, white non-Hispanic homeownership peaked at 76 percent in 2004 and fell to 73.4 percent by 2013 when the housing recovery officially began, a decline of only 2.6 points.
Do Higher Prices Help Minorities?
Conventional wisdom maintains that rising prices are bad for minorities because they are priced out of affordable housing, especially in gentrifying urban neighborhoods where today young Millennial whites are driving prices sky high. However, a new study by two economists at the Federal Trade Commission published in the Journal of Housing Economics this month suggest the exact opposite is the case. Higher prices mean better times for minorities.
Rising prices are good for minorities, the economists argue, because they are accompanied by a loosening of lending standards. Rising values alter lenders; judgments about acceptable levels of risk and expected rates of return on housing-related assets. “This variation may then translate into changes in the out-comes experienced by minority borrowers relative to non-minorities,’ they concluded
Freddie Mac (OTCQB: FMCC) today released the results of its Primary Mortgage Market Survey® (PMMS®), showing mortgage rates mixed with the 30-year fixed-rate falling back below four percent to start the year.
News Facts
30-year fixed-rate mortgage (FRM) averaged 3.97 percent with an average 0.6 point for the week ending January 7, 2016, down from last week when it averaged 4.01 percent. A year ago at this time, the 30-year FRM averaged 3.73 percent.
15-year FRM this week averaged 3.26 percent with an average 0.5 point, up from 3.24 percent last week. A year ago at this time, the 15-year FRM averaged 3.05 percent.
Average commitment rates should be reported along with average fees and points to reflect the total upfront cost of obtaining the mortgage. Visit the following link for theDefinitions. Borrowers may still pay closing costs which are not included in the survey.
Quote Attributed to Sean Becketti, chief economist, Freddie Mac.
“Concerns about overseas economic developments have dominated financial markets to start the year. U.S. Treasury bond yields fell amidst a global equity selloff and flight to safety. In response, the 30-year mortgage rate dipped 4 basis points to 3.97 percent.”
