Discussing the State of Housing Report for 2017, mortgage rates, looking at renting versus buying and much more…
The Harvard Joint Center for Housing Studies releases a report every year and here are a few highlights form this year’s report:
- For the fourth year in a row, the inventory of homes for sale across the US decreased
- Fewer homes were built over the last 10 years than any 10-year period in recent history
- Smaller homes may be coming back
- Rental markets are still strong
- The decline in the US homeownership rate may be nearing an end
- Poverty is growing across metros and in rural areas
I am glad to see smaller homes coming back, a strong rental market and the possible end to the low home ownership rate. However, some of the other findings are quite disturbing.
Disturbing and sadly, not very surprising. That being said, this is a must read report for anyone in real estate.
Train Kept A Rolling All Night Long
The Association of American Railroads (AAR) just reported U.S. rail traffic for the week ending June 17, 2017:
For this week, total U.S. weekly rail traffic was 543,179 carloads and intermodal units, up 5.2 percent compared with the same week last year. Total carloads for the week ending June 17 were 266,402 carloads, up 6.2 percent compared with the same week in 2016, while U.S. weekly intermodal volume was 276,777 containers and trailers, up 4.3 percent compared to 2016.
Good news and we have been seeing this economic indicator stay positive for quite some time now.
The MBA just reported that mortgage applications increased 0.6 percent from one week earlier, according to their Weekly Mortgage Applications Survey for the week ending June 16, 2017.
They also reported on the average rates for the week and while there were some increases, it isn’t too scary!
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($424,100 or less) remained unchanged at 4.13%, with points decreasing to 0.34 from 0.35 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans.
The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $424,100) increased to 4.08% from 4.06%, with points increasing to 0.30 from 0.24 (including the origination fee) for 80 percent LTV loans.
The average contract interest rate for 15-year fixed-rate mortgages increased to 3.40% from 3.37%, with points increasing to 0.38 from 0.34 (including the origination fee) for 80 percent LTV loans.
Please remember that these are the average rates! Because I am a Realtor and not a lender, I suggest that you talk to a lender to find out what is possible for you!
Freddie Mac: Mortgage Rates Decrease Slightly
The report from the MBA showed rates increasing slightly and Freddie said rates increased slightly. So which is it? Well the movement in both reports was so small, I wold say that rates were somewhat stable. Check out the chart:
- 30-year fixed-rate mortgages averaged 3.90% with an average 0.5 point
- This is down from last week when it averaged 3.91%
- Last year at this time, 30-year fixed-rate mortgages averaged 3.56%
- 15-year fixed-rate mortgages averaged 3.17% with an average 0.5 point
- This is down from last week when it averaged 3.18%
- A year ago at this time, 15-year fixed-rate mortgages averaged 2.83%
Sean Becketti, chief economist at Freddie Mac, said:
Following last week’s sharp decline, the 10-year Treasury yield rose 3 basis points this week. The 30-year mortgage rate remained relatively flat, falling 1 basis point to 3.90 percent. Mortgage rates are continuing to hold at year-to-date lows amidst ongoing economic uncertainty.
I hate that the economic uncertainty that is keeping rates low could also be stopping some people from buying a home.
The oft-repeated fantasy is that every new wave of technological innovation creates more jobs than it destroys. Not this time: the total number of full-time jobs has stagnated for years, and most of the new jobs that have been created are in low-wage, moderate-skill positions that cannot move the productivity needle much: jobs such as those in the retail and restaurant sectors.
Just a snippet from another must read on another of my favorite subjects: our future. Get informed so you can plan accordingly…
I also suggest reading Is Your Job About to Disappear?
Highlights from Black Knight’s First Look Report for May 2017:
- Prepayments (historically a good indicator of refinance activity) increaseded 23% MoM
- This is the highest level for prepayments in 2017
- Delinquencies decreased 7% MoM
- Inventory of loans either seriously delinquent (90 or more days past due) or in active foreclosure both hit 10-year lows in May
Check out the chart:
Overall, I would say we are moving in the right direction! So nice to see reports like this.
In a sign that consumers may be shifting preferences from renting to homeownership, a new TransUnion analysis found that 55% of those who shopped for a mortgage in Q1 2017 were non-homeowners – most of whom are renters. This is a significant rise from Q1 2016 (50%) and Q1 2015 (45%).
TransUnion’s report found that millennials’ interest in homeownership is growing steadily over time. In 2017, three in 10 (29%) non-homeowners who shopped for mortgages were millennials, up slightly from 28% in 2016 and 27% in 2015.
Who can blame renters for wanting to buy? Maybe you are still debating whether you should rent or buy…
The most recent Rent vs. Buy Report from Trulia revealed that owning a home is less expensive than renting if you use a 30-year fixed rate home loan in the 100 largest metro areas in the United States. Anderson SC is obviously not one of the 100 largest metros so bear with me here…
Mortgage rates are still very low and, despite house prices increasing across the US, they have not significantly outpaced rental appreciation. With the cost of rent & house prices both increasing, changes in the ‘rent or buy’ decision are generally influenced by changes in mortgage rates.
Nationally, mortgage rates will need to increase to 9.1% for renting to be less expensive than buying. Interest rates haven’t been that high since way back in January of 1995, according to Freddie Mac.
Owning a home has lots of advantages over renting besides just the financial aspect. The numbers have to work and it has to be the right time in your life to buy a home. If you are renting and have any questions about buying a home in the Anderson area, you can always shoot me an email!