By: MPA - Steve Randall - 12 Jan 2016
Cash sales at highest level since 2013 The percentage of cash sales of US homes has risen to the highest level since 2013 according to RealtyTrac data. In November 2015 38.1 per cent of sales of single-family homes and condos were cash transactions, up from 29.8 per cent in October and 30.9 per cent in November 2014. In March 2013 the proportion of cash sales was 38.8 per cent but the increase in November was the first for 29 months.
“The jump in cash sales is likely a knee-jerk reaction to the new documentation and disclosure rules for mortgages that took effect in October, making it even more difficult for buyers using financing to compete with cash buyers in the already competitive housing market,” said Daren Blomquist, vice president at RealtyTrac. “Global economic instability may also be driving more foreign cash buyers back to the relative safety of U.S. real estate.”
San Francisco saw the largest jump in cash buyers (89 per cent) followed by San Jose, CA and Columbus, OH. Miami had the highest share of cash sales (54.8 per cent) followed by New Orleans and Oklahoma City.
Real estate entrepreneur selling Newport Coast mansion
Commercial property entrepreneur Manny Khoshbin has listed his home on California’s Newport Coast for $9.975 million. The OC Register reports that Khosbin, whose company specializes in buys and repositions commercial property in distressed markets, is selling the 10,365 square foot home with four bedrooms, massage room and poker parlor at a reduced asking price having previously sought $11 million and then $10.7 million. The listing agents are Payman Paul Daftarian and Lili Daftarian of KR Homes.
Denver lawmakers to consider construction-defect law
With the new legislative session starting Wednesday Denver lawmakers will be asked to consider introducing legislation to help homeowners claim against builders for defects in their properties. While some municipalities in Colorado have acted to stop homeowners from suing builders, in a bid to persuade developers to build more condos, the Denver Post reports that the measures have not had the desired effect.
Proponents of restricting homeowners’ rights to sue believe that strong statewide legislation could bring developers back but opponents want to see changes which would mean arbitration being the preferred option rather than litigation. A bill proposing that change was rejected last year but will be tabled again in the new session.
Tuesday, January 12, 2016
Tuesday, January 5, 2016
Complexity of TRID Brought Many Unforeseen Issues in the 11th Hour
By: DSNEWS January 5, 2016
Jonathan Kunkle is president of GuardianDocs, the document services division of Denver-based LenderLive Network Inc., an end-to-end residential mortgage services provider supporting financial institutions of all sizes and other related entities with origination, servicing and loan purchase operations. Kunkle has more than 23 years of experience in senior management roles, with 13 years in the mortgage industry. He joined LenderLive as vice president of sales in 2008 when the company purchased Guardian Mortgage Documents. There, he was responsible for all of the company’s sales initiatives. Kunkle recently spoke with DS News about the implementation of TRID with his company, both what has gone well and the challenges, and what the future holds for TRID compliance.
Has the TRID rollout been smooth overall for LenderLive or has it been a challenge?
There are many components of the TRID implementation that went well. For example, when the MBA reported a drop in applications during the first few weeks of October, as TRID took effect, LenderLive’s fulfillment clients actually increased their application flow by more than 10 percent.
Having said that, there have been some unforeseen issues for us, and the rest of the industry, in the 11th hour. These weren’t a result of procrastination, but rather the complexity of the rule, the challenges in testing every possible scenario, and working with all of our partners to ensure their success. I think we saw it all in that 11th hour and, despite what Richard Cordray proclaimed, it was a struggle to be compliant day one for all lenders and the service providers assisting them.
What are some of the major TRID compliance issues you have experienced or heard about from clients?.
Many challenges we saw were related to calculations within the Loan Estimate/Closing Disclosure (LE/CD). Even with an exhaustive testing suite, we still had questions as TRID was going live on unique loan scenarios that challenged our calculation engine. As an example, a seldom used but very complicated calculation is the application of a borrower (or third-party) buy down and how that buy down impacts the TOP, TIP, and worst case payment adjustments and how each is disclosed.
On the client side, we’ve heard of a few challenges around fees changing within the 10% tolerance and how to alert the borrower of that without issuing a new LE. Moreover, as these changes aggregate throughout the course of the origination process, our clients have experienced a new challenge in maintaining a source of truth, passing their compliance audits, and ensuring that the last LE has encapsulated all of the accurate costs.
Cordray’s recent response to the Mortgage Bankers Association’s David Stevens indicating that a ‘good faith effort” to comply with TRID will lead to “corrective and diagnostic, rather than punitive” action by the CFPB is very good news for the industry trying to address these compliance issues. I think the CFPB has recognized that, in order to comply with the Know Before You Owe legislation, it takes an orchestrated effort between people, including the borrower, the seller, the lender, and the settlement company, as well as the systems, including the doc prep tools and loan origination system.
Do you see TRID compliance becoming less or more of an issue in 2016, and why?
With practice, everything becomes more second nature. I also think with TRID we’ll see more loan origination systems adopt the MISMO 3.3 standard, which will help eliminate data entry within a doc provider’s website. Today, this practice of re-keying figures into yet another application just to generate docs is ripe with TRID-related compliance concerns. With MISMO 3.3, the LOS can remain the source of truth, as all of the data will reside therein and not in another system.
Business loans and non-consumer loans are exempt from the TRID regulations. Private Money Lenders specialize in this type of loans.
Jonathan Kunkle is president of GuardianDocs, the document services division of Denver-based LenderLive Network Inc., an end-to-end residential mortgage services provider supporting financial institutions of all sizes and other related entities with origination, servicing and loan purchase operations. Kunkle has more than 23 years of experience in senior management roles, with 13 years in the mortgage industry. He joined LenderLive as vice president of sales in 2008 when the company purchased Guardian Mortgage Documents. There, he was responsible for all of the company’s sales initiatives. Kunkle recently spoke with DS News about the implementation of TRID with his company, both what has gone well and the challenges, and what the future holds for TRID compliance.
Has the TRID rollout been smooth overall for LenderLive or has it been a challenge?
There are many components of the TRID implementation that went well. For example, when the MBA reported a drop in applications during the first few weeks of October, as TRID took effect, LenderLive’s fulfillment clients actually increased their application flow by more than 10 percent.
Having said that, there have been some unforeseen issues for us, and the rest of the industry, in the 11th hour. These weren’t a result of procrastination, but rather the complexity of the rule, the challenges in testing every possible scenario, and working with all of our partners to ensure their success. I think we saw it all in that 11th hour and, despite what Richard Cordray proclaimed, it was a struggle to be compliant day one for all lenders and the service providers assisting them.
What are some of the major TRID compliance issues you have experienced or heard about from clients?.
Many challenges we saw were related to calculations within the Loan Estimate/Closing Disclosure (LE/CD). Even with an exhaustive testing suite, we still had questions as TRID was going live on unique loan scenarios that challenged our calculation engine. As an example, a seldom used but very complicated calculation is the application of a borrower (or third-party) buy down and how that buy down impacts the TOP, TIP, and worst case payment adjustments and how each is disclosed.
On the client side, we’ve heard of a few challenges around fees changing within the 10% tolerance and how to alert the borrower of that without issuing a new LE. Moreover, as these changes aggregate throughout the course of the origination process, our clients have experienced a new challenge in maintaining a source of truth, passing their compliance audits, and ensuring that the last LE has encapsulated all of the accurate costs.
Cordray’s recent response to the Mortgage Bankers Association’s David Stevens indicating that a ‘good faith effort” to comply with TRID will lead to “corrective and diagnostic, rather than punitive” action by the CFPB is very good news for the industry trying to address these compliance issues. I think the CFPB has recognized that, in order to comply with the Know Before You Owe legislation, it takes an orchestrated effort between people, including the borrower, the seller, the lender, and the settlement company, as well as the systems, including the doc prep tools and loan origination system.
Do you see TRID compliance becoming less or more of an issue in 2016, and why?
With practice, everything becomes more second nature. I also think with TRID we’ll see more loan origination systems adopt the MISMO 3.3 standard, which will help eliminate data entry within a doc provider’s website. Today, this practice of re-keying figures into yet another application just to generate docs is ripe with TRID-related compliance concerns. With MISMO 3.3, the LOS can remain the source of truth, as all of the data will reside therein and not in another system.
Business loans and non-consumer loans are exempt from the TRID regulations. Private Money Lenders specialize in this type of loans.
Wednesday, December 16, 2015
Fed rate decision comes in
BY: Mortgage Professional America - 16 Dec 2015
The Federal Reserve announced its benchmark rate target Wednesday afternoon and, as expected, raised the target for its benchmark rate.
“Given the economic outlook, and recognizing the time it takes for policy actions to affect future economic outcomes, the Committee decided to raise the target range for the federal funds rate to 1/4 to 1/2 percent,” the Fed said in a release. “The stance of monetary policy remains accommodative after this increase, thereby supporting further improvement in labor market conditions and a return to 2 percent inflation.”
The Fed committee said economic activity has been expanding at a moderate pace; household spending and business investment have increased over the past few months.
The decision was also influenced by ongoing jobs gains and declining unemployment.
“The Committee currently expects that, with gradual adjustments in the stance of monetary policy, economic activity will continue to expand at a moderate pace and labor market indicators will continue to strengthen,” the Fed said. “Overall, taking into account domestic and international developments, the Committee sees the risks to the outlook for both economic activity and the labor market as balanced.”
The Fed also set out a future plan for the rate.
“The Committee expects that economic conditions will evolve in a manner that will warrant only gradual increases in the federal funds rate; the federal funds rate is likely to remain, for some time, below levels that are expected to prevail in the longer run,” the Fed said. “However, the actual path of the federal funds rate will depend on the economic outlook as informed by incoming data.”
The Federal Reserve announced its benchmark rate target Wednesday afternoon and, as expected, raised the target for its benchmark rate.
“Given the economic outlook, and recognizing the time it takes for policy actions to affect future economic outcomes, the Committee decided to raise the target range for the federal funds rate to 1/4 to 1/2 percent,” the Fed said in a release. “The stance of monetary policy remains accommodative after this increase, thereby supporting further improvement in labor market conditions and a return to 2 percent inflation.”
The Fed committee said economic activity has been expanding at a moderate pace; household spending and business investment have increased over the past few months.
The decision was also influenced by ongoing jobs gains and declining unemployment.
“The Committee currently expects that, with gradual adjustments in the stance of monetary policy, economic activity will continue to expand at a moderate pace and labor market indicators will continue to strengthen,” the Fed said. “Overall, taking into account domestic and international developments, the Committee sees the risks to the outlook for both economic activity and the labor market as balanced.”
The Fed also set out a future plan for the rate.
“The Committee expects that economic conditions will evolve in a manner that will warrant only gradual increases in the federal funds rate; the federal funds rate is likely to remain, for some time, below levels that are expected to prevail in the longer run,” the Fed said. “However, the actual path of the federal funds rate will depend on the economic outlook as informed by incoming data.”
Monday, December 14, 2015
The Federal Reserve will likely raise interest rates this week. This is what happens next.
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Now, financial markets are all but certain that the Fed is ready to start pulling back. Odds of an increase in in the Fed’s target rate when the its top brass meet in Washington this week have topped 80 percent. Fed Chair Janet Yellen said earlier this month that she sees the risks to the Fed’s economic outlook as “very close to balanced” -- which many analysts see as code for a rate hike. The Fed is expected to announce it decision on Wednesday afternoon.
“With the meeting now just a few days away, we see very little to derail lift off at this point,” Barclays economist Michael Gapen wrote in a client note.
After deciding to increase rates, the first challenge facing the Fed is exactly how to do it. Historically, the central bank has set a target for the federal funds rate -- the amount that banks charge to lend to each other overnight -- and bought and sold Treasury bonds on the open market to hit that goal.
But that method will prove too unwieldy now that the Fed has amassed a balance sheet of more than $4 trillion. Instead, the central bank hopes to manage the fed funds rate by changing two other rates: the interest it pays to banks for reserves held at the Fed and the amount it pays other financial institutions, such as money market funds, for short-term trades known as reverse repurchase agreements. The former is expected to act as a ceiling on the fed funds rate; the latter a floor.
The mechanics are complex, highly technical -- and untested on a broad scale. Still, the Fed has been conducting smaller trials for the past two years and is confident the experiment will work.
“Monetary policy implementation is just a means to an end,” said Simon Potter, head of the Fed’s open market operations in New York, said in a recent speech. “There is no obvious single ‘right’ way to do it.”
[Top Fed official: The economy can handle a rate increase]
Once the Fed achieves liftoff, it will have to decide how long to wait before raising rates again. Officials have emphasized that it will move gradually to test the response of financial markets and the economy, both at home and around the world. The Fed’s fall forecast showed officials expect to push their benchmark interest rate up to a median of 1.4 percent at the end of next year, implying a quarter-percentage point hike at every other time the central bank meets in 2016.
Investors, however, believe those projections are too optimistic. Financial markets overwhelmingly are betting that the Fed’s rate will be below that at the end of next year. Central bank officials have tried to convince the public that they do not plan on stair-step increases, emphasizing that they can move more quickly or more slowly, depending on the progress of the recovery.
“There remains the delicate task of guiding expectations for the future path of rates,” Millan Mulraine, a deputy chief analyst at TD Securities, wrote in a research note before the meeting. “Managing the message will be central to the Fed’s communication effort with the markets.”
The Fed also eventually plans to shrink its balance sheet, but it also may not return to its pre-crisis level. In a strategy outlined last year, the Fed committed to maintaining the size of its balance sheet until after the first rate hike. But exactly how long afterward remains up for debate.
The central bank said it plans to reduce its balance sheet by not replacing assets as they mature, a process known as reinvestment. This month alone, the Fed committed to reinvesting $21 billion. It’s likely the Fed will slowly phase out that process, then allow its portfolio to decline naturally. It has explicitly stated that it does not expect to sell its holdings of mortgage-backed securities.
Monday, November 16, 2015
U.S. Stocks Gain With Dollar as Gold Rally Stalls, Oil Advances
BY: Bloomberg Business - Jeremy Herron - November 16, 2015
The impact from the Paris attacks on global financial markets faded, with investors refocusing attention on the prospects for growth worldwide as the Federal Reserve considers raising interest rates.
The Standard & Poor’s 500 Index halted a three-day slide that capped its worst week since August, while European equities shrugged off declines to close higher as France expanded an aerial bombardment in Syria. An advance in gold stalled near $1,083 an ounce, while the euro weakened toward a six-month low versus the dollar. Treasuries rose with French and German bonds.
“We may not be seeing as much of a negative reaction as we could have if the tragedy occurred two weeks ago when the market was up within one percent of the highs,” said Frank Cappelleri, a market technician at Instinet LLC in New York. “Not to say that we wont get downside going forward but today at least, knowing where the market has come from, it’s helped it at least to be stable.”
The history of terror incidents around the world over the last 15 years shows market reactions are often sharp and, increasingly, short-lived. European shares initially retreated before erasing the loss in trading about one-fifth below the 30-day average. While gold climbed for the first time in five days, its gains faded as shares reversed.
Global equities fell last week by the most in two months, on speculation an October rally had gone too far, too fast amid renewed signs that economies from China to Europe were slowing. The rebound Monday was led by commodities producers that beaten down last week. Two-year Treasury notes halted an advance from last week as futures traders bet the Federal Reserve remains on track to boost rates as soon as next month.
Stocks
The S&P 500 rose 1 percent at 2 p.m. in New York, poised to halt a three-day slide that capped the gauge’s worst week since August. The S&P 500 had fallen in seven of the previous eight sessions after Fed Chair Janet Yellen said policy makers’ December meeting was a “live possibility” for a rate increase.
Shares of commodities and consumer-staples producers led gains Monday, while financial firms slipped with discretionary-product makers.
“This is going to be a market driven by U.S. economic data,” Stephen Wood, who helps manage $265 billion as chief market strategist for North America at Russell Investments in New York, said by phone. “I think the market is still keeping it’s gaze on a December Fed decision.”
The Stoxx Europe 600 Index rose 0.3 percent and the CAC 40 Index of French erased losses of more than 1 percent. Total SA and BP Plc all climbed more than 1 percent, sending the Stoxx 600 Oil & Gas Index higher for the first time in four days. Travel shares fell the most in Europe, with Accor SA down 4.2 percent and Air France-KLM Group losing 5.8 percent.
While France dispatched warplanes to bomb Islamic State’s Syrian nerve center after assailants killed at least 129 people on Friday, the history of terror incidents over the past 15 years shows market reactions can be sharp and short-lived.
“Terrible as these events are on a human level, from a market perspective the impact tends to be transitory,” said Richard McGuire, head of rates strategy at Rabobank International in London.
Private Money Lenders continue offering a great opportunity to buy or refinance before the rates go up in December.
Currencies
The euro approached a six-month low versus the dollar on concern the terror attacks will slow expansion in Europe’s economy. The euro slipped 0.8 percent to $1.0687, the lowest since April. The yen weakened 0.5 percent to 123.23 to the dollar.
U.S. inflation data are scheduled to be released Tuesday. The Fed will publish minutes from its October meeting on Nov. 18.
Bonds
U.S. Treasury two-year notes ended a four-day gain amid speculation the terror attacks won’t prevent the Fed from raising interest rates next month. The yield rose less than one basis point to 0.83 percent, while the 10-year note yield was little changed at 2.26 percent.
Futures show a 64 percent chance the Federal Open Market Committee will announce a rate increase when it meets in December, even after the attacks in Paris, which followed suicide bombs in Beirut that killed at least 43 people.
U.S. corporate debt fell for a second straight week, losing 0.028 percent , according to Bank of America Merrill Lynch Index. The losses were led by the riskiest debt with the difference in yield between investment-grade bonds and junk debt rising to the highest levels in more than a month.
French and German government bonds were little changed after five days of gains. The French 10-year yield was at 0.87 percent, while the yield on similar-maturity German bunds at 0.54 percent. Yields on Belgian, French and German two-year notes fell to the most negative on record.
Emerging Markets
Emerging-market assets bore the brunt of the shift away from risk assets in the wake of Europe’s worst terror attack in more than a decade. The MSCI Emerging Markets Index decreased 0.9 percent to a six-week low. Benchmarks in Hong Kong, South Korea and the Philippines led losses.
A gauge tracking 20 developing-nation currencies fell toward a record, as the attacks compounded concerns over deteriorating economic growth and looming U.S. interest-rate increases. South Korea’s won weakened 0.9 percent and Turkey’s lira declined 0.7 percent.
The impact from the Paris attacks on global financial markets faded, with investors refocusing attention on the prospects for growth worldwide as the Federal Reserve considers raising interest rates.
The Standard & Poor’s 500 Index halted a three-day slide that capped its worst week since August, while European equities shrugged off declines to close higher as France expanded an aerial bombardment in Syria. An advance in gold stalled near $1,083 an ounce, while the euro weakened toward a six-month low versus the dollar. Treasuries rose with French and German bonds.
“We may not be seeing as much of a negative reaction as we could have if the tragedy occurred two weeks ago when the market was up within one percent of the highs,” said Frank Cappelleri, a market technician at Instinet LLC in New York. “Not to say that we wont get downside going forward but today at least, knowing where the market has come from, it’s helped it at least to be stable.”
Global equities fell last week by the most in two months, on speculation an October rally had gone too far, too fast amid renewed signs that economies from China to Europe were slowing. The rebound Monday was led by commodities producers that beaten down last week. Two-year Treasury notes halted an advance from last week as futures traders bet the Federal Reserve remains on track to boost rates as soon as next month.
Stocks
The S&P 500 rose 1 percent at 2 p.m. in New York, poised to halt a three-day slide that capped the gauge’s worst week since August. The S&P 500 had fallen in seven of the previous eight sessions after Fed Chair Janet Yellen said policy makers’ December meeting was a “live possibility” for a rate increase.
“This is going to be a market driven by U.S. economic data,” Stephen Wood, who helps manage $265 billion as chief market strategist for North America at Russell Investments in New York, said by phone. “I think the market is still keeping it’s gaze on a December Fed decision.”
The Stoxx Europe 600 Index rose 0.3 percent and the CAC 40 Index of French erased losses of more than 1 percent. Total SA and BP Plc all climbed more than 1 percent, sending the Stoxx 600 Oil & Gas Index higher for the first time in four days. Travel shares fell the most in Europe, with Accor SA down 4.2 percent and Air France-KLM Group losing 5.8 percent.
While France dispatched warplanes to bomb Islamic State’s Syrian nerve center after assailants killed at least 129 people on Friday, the history of terror incidents over the past 15 years shows market reactions can be sharp and short-lived.
“Terrible as these events are on a human level, from a market perspective the impact tends to be transitory,” said Richard McGuire, head of rates strategy at Rabobank International in London.
Private Money Lenders continue offering a great opportunity to buy or refinance before the rates go up in December.
Currencies
The euro approached a six-month low versus the dollar on concern the terror attacks will slow expansion in Europe’s economy. The euro slipped 0.8 percent to $1.0687, the lowest since April. The yen weakened 0.5 percent to 123.23 to the dollar.
U.S. inflation data are scheduled to be released Tuesday. The Fed will publish minutes from its October meeting on Nov. 18.
Bonds
U.S. Treasury two-year notes ended a four-day gain amid speculation the terror attacks won’t prevent the Fed from raising interest rates next month. The yield rose less than one basis point to 0.83 percent, while the 10-year note yield was little changed at 2.26 percent.
Futures show a 64 percent chance the Federal Open Market Committee will announce a rate increase when it meets in December, even after the attacks in Paris, which followed suicide bombs in Beirut that killed at least 43 people.
U.S. corporate debt fell for a second straight week, losing 0.028 percent , according to Bank of America Merrill Lynch Index. The losses were led by the riskiest debt with the difference in yield between investment-grade bonds and junk debt rising to the highest levels in more than a month.
French and German government bonds were little changed after five days of gains. The French 10-year yield was at 0.87 percent, while the yield on similar-maturity German bunds at 0.54 percent. Yields on Belgian, French and German two-year notes fell to the most negative on record.
Emerging Markets
Emerging-market assets bore the brunt of the shift away from risk assets in the wake of Europe’s worst terror attack in more than a decade. The MSCI Emerging Markets Index decreased 0.9 percent to a six-week low. Benchmarks in Hong Kong, South Korea and the Philippines led losses.
A gauge tracking 20 developing-nation currencies fell toward a record, as the attacks compounded concerns over deteriorating economic growth and looming U.S. interest-rate increases. South Korea’s won weakened 0.9 percent and Turkey’s lira declined 0.7 percent.
Friday, November 13, 2015
How financing affects the entire real estate market – by Maria Hopkins
BY: New England Real Estate Journal - November 13th, 2015
I think many people have underestimated the influence that financing has on the real estate market.
Although most people can see how lower rates can lead to higher overall real estate values, the availability of financing or lack of availability is huge.
Always have in mind different financing opportunities for example there is Private Money Lenders that are a great tool to move those complicated clients that just don't qualify with conventional lenders.
One of the factors that continues to fuel the market vs. the existence of all kinds of financing programs. VA financing is at an all time high with so many veterans now wanting to buy or refinance and with a VA loan they can borrow 100% and they are so deserving of this benefit. The property itself has to be in pretty good shape or have some repairs done in order to close the loan but it’s not as hard as some think to sell to a veteran. The process has actually less risk of having problems than many of the other financing programs. The recent changes to FHA rules for appraisals after September 14, 2015 has really made that type of financing the most difficult. (This includes USDA loans.) The appraisers now have to inspect a property in great detail like a home inspector and require more repairs to be done. They are liable for ensuring that the condition of the property meets certain standards but because they are not home inspectors or licensed contractors, they are forced to require these professionals to inspect the property and then rely on them partially for the decisions about repairs they will have to require. The appraisal fees therefore have increased for the time and liability. The lenders that can do what they call streamline 203K loans are the best lenders to finance FHA, because they can just switch to this kind of loan if necessary to finance the required repairs.
It is amazing that rates are still so good, yet people think they should wait to buy. For those that still can, this is the greatest time to buy anything. The rates may go up next year which may affect the market. Those of you who are still thinking about it—WHAT ARE YOU WAITING FOR? There are amazing real estate deals out there. Yes—it is time consuming to go looking for them but the payoff can be great.
And for those of you who think they are going to buy and “flip”—be very careful. Many are overpaying for these properties. The costs to renovate are always higher than you think. You must make allowances for those hidden costs. Carrying costs are increasing. You have to figure in the cost of the mortgage for 3, 6 maybe 9 months sometimes, while you are waiting to sell. Better yet –underprice it from the beginning.
The biggest problem that I see is that the real estate agents are not as educated as they need to be to give proper guidance to their sellers and buyers. They do not know enough about financing and how it can affect the real estate transaction. When I give a seminar on the topic, we get maybe 40 people who show up when there should be hundreds. If a deal falls apart because of financing issues, usually there are things that should have been known and dealt with at the negotiating stage and the Realtors just weren’t educated enough to know. During the deal is not the time to learn. Sellers and buyers deserve better. I was a realtor before I was an appraiser and I still am. I just don’t sell anymore unless it involves my own family. So I know how hard real estate agents work, sometimes with no closing at the end. Many things can happen causing a real estate transaction to fall apart. Financing has never been as complicated as it is today and real estate agents, in my opinion, have never been so uneducated. Don’t get me wrong. They try to be, but they don’t even know what they don’t know. The education is not even available fast enough to keep up with the changes.
So we are all learning how financing can create or destroy wealth. It is an integral part of real estate value. And one way or another, history always repeats itself in the real estate market.
Maria Hopkins, SRA, RA, is president of Maria Hopkins Associates, Spencer, Mass.
Wednesday, November 11, 2015
Mortgage Rates Set to Rise, Adding Frenzy to Real Estate Market
By: Mainstreet.com - Brian O'Connell -
A highly positive October jobs report, with 271,000 new jobs created, shows the U.S. economy picking up speed, and that can mean good or bad news for the residential real estate market, depending on whether you're a seller or a buyer.
Realtor.com estimates the strong employment report will boost U.S. home sales activity and will also hike U.S. mortgage rates above 4%.
Private Money Lenders are available to help you purchase that home in this increased demand for housing environment. Fast and efficient closings will help you obtain your property before somebody else gets a pre-approval from the Institutional Lenders.
"We should see continuing strong demand for housing in the months ahead if today's strong jobs report reflects a true return back to a strong growth trend we've seen over the last few years," says Jonathan Smoke, chief economist at Realtor.com. "The healthy strong employment results for the past two years created an uptick in household formation, which has driven increased demand for home purchases and rentals."
"The jobs report will influence the long-term bond market, so mortgage rates will increase in response," he adds. "The average 30-year conforming mortgage rate was 3.99% yesterday, having increased nine basis points in one week due to the consensus view of a strong, but not this strong, employment report. The 30-year conforming rate will likely top 4% as a result of this news."
If the Federal Reserve was waiting for proof of an economic rebound, some experts say the latest jobs number fits the bill.
Robert R. Johnson, CEO of The American College of Financial Services, says the Fed has been looking for strong evidence that the economy is recovering prior to increasing the fed funds target rate, and the jobs number should "push up" the date when the Federal Reserve raises interest rates, likely in December.
"This development is not good news for people looking to take out mortgage debt in the near future," Johnson says. "Once the Fed starts raising rates, interest rates throughout the economy, including mortgage rates, auto loan rates and other loan rates will trend upward. I believe that anyone thinking about refinancing a mortgage or buying a home and taking out an initial mortgage should not wait, as rates will rise."
Like Smoke, Johnson also believes the jobs number will boost home sales. "Many potential homebuyers may see an opportunity to buy a home and take advantage of current low mortgage rates," he adds.
A highly positive October jobs report, with 271,000 new jobs created, shows the U.S. economy picking up speed, and that can mean good or bad news for the residential real estate market, depending on whether you're a seller or a buyer.
Realtor.com estimates the strong employment report will boost U.S. home sales activity and will also hike U.S. mortgage rates above 4%.
Private Money Lenders are available to help you purchase that home in this increased demand for housing environment. Fast and efficient closings will help you obtain your property before somebody else gets a pre-approval from the Institutional Lenders.
"We should see continuing strong demand for housing in the months ahead if today's strong jobs report reflects a true return back to a strong growth trend we've seen over the last few years," says Jonathan Smoke, chief economist at Realtor.com. "The healthy strong employment results for the past two years created an uptick in household formation, which has driven increased demand for home purchases and rentals."
"The jobs report will influence the long-term bond market, so mortgage rates will increase in response," he adds. "The average 30-year conforming mortgage rate was 3.99% yesterday, having increased nine basis points in one week due to the consensus view of a strong, but not this strong, employment report. The 30-year conforming rate will likely top 4% as a result of this news."
If the Federal Reserve was waiting for proof of an economic rebound, some experts say the latest jobs number fits the bill.
Robert R. Johnson, CEO of The American College of Financial Services, says the Fed has been looking for strong evidence that the economy is recovering prior to increasing the fed funds target rate, and the jobs number should "push up" the date when the Federal Reserve raises interest rates, likely in December.
"This development is not good news for people looking to take out mortgage debt in the near future," Johnson says. "Once the Fed starts raising rates, interest rates throughout the economy, including mortgage rates, auto loan rates and other loan rates will trend upward. I believe that anyone thinking about refinancing a mortgage or buying a home and taking out an initial mortgage should not wait, as rates will rise."
Like Smoke, Johnson also believes the jobs number will boost home sales. "Many potential homebuyers may see an opportunity to buy a home and take advantage of current low mortgage rates," he adds.
There is some history on the link between a stronger jobs climate and higher mortgage rates. "In 2004, when the Fed increased interest rates for the first time in four years, it caused the booming real estate market to get more manic," says John Wake, the so-called geek-in-chief at Real Estate Decoded and a realtor with HomeSmart in Scottsdale, Ariz. "Many people expected the increase to be the first of many so they became even were more desperate to buy a house right away."
Wake says they were right, as the Federal Funds Rate increased from 1% in the summer of 2004 to 5% in the summer of 2006. "Sure, in the long run higher rates hurt the demand for homes, but in the short and medium run they can stoke demand," he says. "It all depends on what people think an interest rate increase today means for interest rates tomorrow."
Right now, some real estate insiders say higher mortgage rates are on the way, with the booming October jobs number insuring that day comes sooner than people might think.
Right now, some real estate insiders say higher mortgage rates are on the way, with the booming October jobs number insuring that day comes sooner than people might think.
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