Talking about home price reports from Case Shiller, Black Knight FHFA and much more…
U.S. Office Market Sending Mixed Signals
The U.S. office market appears to be at the stage in the real estate cycle that analysts often describe as a turning point or tipping point. Overall, the U.S. office market continued to post solid fundamentals during the first quarter, including very strong net absorption, while traces of a slowdown in demand appeared in some markets.
While I do NOT deal with commercial real estate, I DO watch many different indicators about our economy. What is happening in the commercial sector WILL affect the economy.
Which means it will have an effect on residential real estate. The key thing I noticed is the word “slowdown” being used…
So Much Wrong So Little Time
Interesting suggestion came from the AEI that REALTORS can cure the weak housing market by cutting their commissions:
NAR should increase supply by requesting its members to lower real estate commissions by 2%. This would address a pressing supply-side problem pointed out by the NAR’s release—a dearth of new listings, inadequate supply, and prices rising twice as fast as incomes.
Does this smell like the AEI is wanting the NAR to engage in price fixing? NAR suggesting every member cuttheri commission sounds almost like a violation of the Sherman Anti Trust Act…
It would not take much to get the FTC sniffing around…
I am NOT saying every REALTOR charges the same amount. Some charge less, some charge more, some deserve what they are paid and some….
AEI does have a legit reason for coming up with this lame brain scheme. AEI is pissed that NAR wants FHA mortgage insurance premiums lowered.
NAR said this would make homes more affordable.
Which it would but only a teeny tiny little bit…
But don’t take my word for it NOT helping the housing market. Hop over and check out AEI Suggests Lowering Realtor Commissions to Spur Housing
If You Do Something Wrong, Shouldn’t You Be Punished?
Right after the financial crisis, an SEC lawyer fought a lonely struggle to get his agency to crackdown harder on Goldman bankers. He lost.
I hope you will read this article and keep it in the back of your mind as we head deeper into the election. Ask yourself how you think the candidates would handle this situation if they were POTUS when it happened.
Also another MUST read is Why I (Belatedly) Blew the Whistle on the SEC’s Failure to Properly Investigate Goldman Sachs
Great News About Mortgage Delinquencies
- National delinquency rate at the lowest point since March 2007
- 30-Day Delinquency Rate Lowest Since Pre-2000
- Foreclosure starts down 14% from February
While this is about the entire US, this is seriously good news for the economy and real estate.
Easy Money and the Economy
Seems weird to say easy money as the economy has certainly not been easy for many Americans the past several years. Consider this:
Critics of global monetary policy regularly argue that the current level of interest rates is artificially low. A simple medical analogy might help them understand how wrong this thinking is. Sadly, many central banks are succumbing to this pressure. Here in the U.S., the Fed is planning to continue the tightening of monetary policy that it initiated in mid-2013. Its main goal is to gradually eliminate the use of monetary insulin, even though the symptoms of low prices and low employment persist unabated.
Read the rest at Easy Money Is Like Insulin
Will Mortgage Rates End 2016 at Historic Lows?
In a recent interview, Fannie Mae Chief Economist Doug Duncan said:
Our current forecast has the 30-year fixed rate ending the year at 3.7 percent, which is about where we are today.
While predictions are always entertaining, I would not want to miss out on the home I loved because I was gambling that rates were going to drop.
Besides, it is up to date information and not predictions that you should consider. Such as my weekly Mortgage Rate Updates.
FHFA: US Home Prices Up 5.6%
From the FHFA Home Price Index for February 2016:
- US house prices rose 0.4% from January 2016 to February 2016
- From February 2015 to February 2016, US house prices were up 5.6%
- Since October 2015, US home prices have been above the previous peak back in 2007
Check out the chart showing house prices:
Why the Economy Is Slowing
In a recent article, NAR’s Chief Economist Lawrence Yun, said there are two main reasons for the latest slowing of the economy:
- Constrained home building
- Business spending
I would include stagnant income growth as more income means people will buy more stuff.
Simply put: our economy depends on people spending.
If people spend more, then business will spend more. And hire more. Which means more people start spending. It is a cycle. Not really a healthy cycle but it is what it is..
Home Builders: Imitation is The Simplest Form of Profit
Are you wondering why home builders aren’t building more entry level homes? I know you will be after reading this from Bloomberg:
D.R. Horton has boosted sales volumes with the help of its entry-level Express Brand, which appeals to buyers facing a persistently small number of existing homes listed for sale.
So if one home builder is killing it by focusing on starter homes, why haven’t others?
It could be the market these home builders are in. For example, in Anderson County I see find plenty of developments of new entry level homes in the MLS. Often these homes are the best deals in certain price ranges in our market.
Don’t Worry – Buy Happy
According to a recent poll, 26% of Americans are stressed about making their housing payment. This is true for both renters and owners…
My advice for anyone buying a home is to spend as LITTLE as possible. The ego is the downfall of many.
You don’t need an house that makes a statement…
You need a house to make your home.
Once a house becomes your home, it will make a statement. A statement that YOU write.
If you are stressed about making the payments, you will NOT have a happy home. Do you want to sacrifice your social life simply to make a mortgage payment?
My lender approved my wife and I for 4 to 5 times what we spent. But we set our maximum price by simply working backwards from a monthly payment that is comfortable for us.
I suggest you do the same and ignore your ego…
Real Estate Is Your Best Investment
From a recent Gallup poll:
Real estate, already Americans’ top pick as the “best long-term investment” for the last two years, has increased its lead over four other investment choices. Thirty-five percent of Americans now choose real estate, compared with 22% for stocks and mutual funds, 17% for gold, 15% for savings accounts/CDs and 7% for bonds.
I agree but with one little caveat:
If You Buy Smart, Real Estate Is Your Best Long Term Investment
It takes specialized knowledge to ensure you are getting the best deal. I am not just talking about flipping homes or rental properties.
The house you plan on living in is an investment. It is a business decision wrapped up in an emotional package.
A GOOD REALTOR can help you make the best decision no matter what your real estate goal is.
New Home Sales March 2016
Well I mentioned how Horton is kicking butt so now it is time to look at the most recent new home sales data from HUD and the Census Bureau:
- Sales of new single-family houses in March 2016 were 1.5% below the revised February 2016 level
- Sales of new single-family houses in March 2016 were 5.4% above the March 2015 level
- The median sales price of new houses sold in March 2016 was $288,000
- The average sales price of new houses sold in March 2016 was $356,200
- There is a supply of 5.8 months at the current sales rate
Some people are freaking out because we have had 3 consecutive months of declining sales if you are comparing to the previous month. While this is NOT good, it is the changes from the same time period one year ago that I look at.
Home Prices Up 5.3% Year-Over-Year
Check out the nifty little graphic from Black Knight about US home prices in February 2016:
Home Buying Sentiment Continues to Rise
Some highlights from TD Bank’s fourth annual Mortgage Service Index:
- 42% of Americans expect the housing market to improve over the next 6 months
- 56% feel it’s a good time to buy a home
- One in five consumers extremely likely to purchase a new home in the next year
If 1 in 5 Americans are going to buy a home in the next year, my advice to my brother and sister REALTORS is to stock up on coffee.
Coffee is for closers and sounds like there will be plenty of closings…
Case Shiller: Home Prices Rise in February
I certainly saved the biggest news for the last. US home prices increased in February, with all three S&P/Case-Shiller Home Price Indices reporting gains:
- The S&P/Case-Shiller U.S. National Home Price Index increased 5.3% YoY
- The 10-City Composite increased 4.6% YoY
- The 20-City Composite’s increased 5.4% YoY
David M. Blitzer, Managing Director and Chairman of the Index Committee at S&P Dow Jones Indices said:
Home prices continue to rise twice as fast as inflation, but the pace is easing off in the most recent numbers. The year-over-year figures for the 10-City and 20-City Composites both slowed and 13 of the 20 cities saw slower year-over-year numbers compared to last month.
Awesome news! Check out the chart:
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