Home Builders Hold Great Confidence For New Homes Over Next 6 Months

 

Home Builder Confidence Positive 6 Month Outlook April 2013

April 16, 2013 by Leave a Comment

The National Association of Home Builders (NAHB) Wells Fargo Housing Market Index (HMI) report for April shows that builder confidence slipped by two points to a rating of 42 from the March reading of 44.

The Housing Market Index (HMI) measures home builder confidence in market conditions for newly built single family homes.

A reading of more than 50 indicates better than average confidence, while readings below 50 indicate that home builders have concerns about current market conditions.

NAHB Housing Market Index Results For April

Home builders expressed concern over a gap between a growing demand for homes and builders’ ability to meet the demand for new homes as housing market conditions improve.

Top concerns cited by home builders surveyed include:

  • Availability of construction credit
  • Construction costs rising faster than home values
  • Restrictive mortgage lending rules impacting would-be home buyers

Supply chains for building materials and available developed lots are also impacting home builder confidence, as they have been lagging behind increasing demand for homes since the recession and will need more time to catch up.

Six Month Confidence Forecast Strongest Since February 2007

While builder confidence fell on a month-to-month basis, home builders have a more positive outlook for the next six months.

The builder confidence reading for the next six months came in at 53 for April, which is the highest reading since February 2007.

In terms of demand for newly built homes, the home builders surveyed said that a shortage of existing homes, low mortgage rates and increasing consumer confidence are expected to improve the market for existing homes.

Consumer confidence is important to all facets of the home building and mortgage lending industries.

Buying a home is typically the largest investment that consumers make, and their confidence in the economy plays a role in their decisions about when or if they buy a home.

Regional readings for housing markets are based on a three month rolling average.

Results for April were unchanged or lower in all four regions as compared to the rolling average reported in March:

  • Northeast: The reading of 38 is unchanged from March.
  • Midwest: The reading declined by two points to 45.
  • South: April’s reading declined by four points to 42
  • West: April’s reading declined by three points to 55, but remains in positive territory.

Regional readings reflect conditions impacting only a specific area of the U.S.

Recent examples include the impact of Hurricane Sandy in the Northeast, and an ongoing lack of land available for home construction in the West.

What’s Ahead For Mortgage Rates This Week – April 15, 2013

 

What's Ahead For Mortgage Rates - April 15 2013April 15, 2013 by Leave a Comment

Mortgage rates saw little change last week amidst mixed economic news.

Treasury auctions held on Tuesday, Wednesday and Thursday saw weak demand; this could have been caused by the FOMC minutes that were released on Wednesday.

The minutes indicated that some FOMC members supported ending the current quantitative easing (QE) program within a few months.

The Fed is currently purchasing $85 billion monthly in bonds and Mortgage Backed Securities.

If the QE program is ended, demands for bonds and MBS will decline, which usually raises mortgage rates.

Employment Numbers Show Promise For Housing Market

Thursday’s jobless claims offered some positive news.

Jobless claims fell to 346,000, which is well below Wall Street’s estimate of 365,000 jobless claims and the prior week’s report of 385,000 jobless claims.

As more people find work, more families become able to buy homes.

Demand for homes will boost the housing market, which is already expanding in many areas.

While higher home prices are good for the economy, higher mortgage rates may be likely to follow.

This potentially presents a “double-edged sword” to home buyers with little financial flexibility.

Slower Retail Sales Largely Due To Autos

Retail Sales, which represent approximately 70 percent of the U.S. economy, moved from February’s level of 1.1 percent to -0.4 percent in March.

Expectations were for 0.0 percent change.

The Retail Sales report exclusive of the volatile automotive sector was nearly identical except for the February’s reading of 1.0 percent.

These reports suggest that while the economy is improving in some areas, it has a way to go before it has truly recovered.

Whats Coming Up Next?

This week, investors will be paying attention to the Consumer Price Index (CPI) and the closely-related Core CPI, which is nearly identical except for its excludes the more volatile food and energy sectors.

These reports will be released on Tuesday for March, with little change expected for the CPI and no change expected for the Core CPI as compared to February.

The CPI is considered an important indicator of inflation.

Unexpected changes in inflationary growth can cause rapid and volatile responses in the financial markets.

Wednesday brings the Fed’s Beige Book, which presents key economic data for each of the Fed’s 12 regions.

Investors watch the Beige Book for signs of the Fed’s position on economic policy during the upcoming FOMC meeting.

Jobless claims will be released Thursday with the expectation of 350,000 claims filed as compared to last week’s 346,000 jobless claims.

6 Essential Spring Cleaning Chores to Make Your Home Shine

 

Spring Cleaning Tips For April 2013

April 12, 2013 by Leave a Comment

If the thought of cleaning your home this spring doesn’t bring a smile to your face, you’re not alone.

To help you get going now, here is a short list of the 6 essential spring-cleaning chores.

1. Store winter clothes.

It’s time to pack away your winter clothes.

Coats, sweaters, and bulkier clothing need to be inspected, cleaned and packed away.

Store your clothes somewhere clean, cool, dark and dry.

2. Wash window treatments.

You’ll be surprised at the huge amount of dirt and grime that a thorough window cleaning removes.

Wash blinds, launder curtains that are machine washable and send drapes to the dry cleaners.

While you’re at it, dust the window casing, wash your windowsills and clean any window hardware.

3. Clean carpets and upholstery.

You need to deep clean your fabrics that have absorbed a winter’s worth of dust and germs.

Shampoo your carpets and clean cloth furniture.

Open windows to speed the drying process, which can take a day or more.

4. Wash woodwork, walls, baseboards and cabinets.

Even if the walls of your home don’t look like they need cleaning, they do.

Just enough dust clings to vertical surfaces to warrant a seasonal bath.

Using a sponge and dish-washing soap, wash the surface in sections to make sure you don’t miss a spot.

5. Clean light and ceiling fixtures.

To clean your light fixtures, remove the light bulb and fixture if possible.

Wash the glass fixtures in soap and water. Wipe the light bulbs with a rag.

If the fixture cannot be removed from the ceiling, use a damp cloth to wipe it off and then dry the fixtures.

The easiest way to clean your ceiling fans is to use a vacuum with a soft nozzle attachment.

6. Check your coils.

Caked-on dust can cause your refrigerator to overheat, so take the time to clean the condenser coil.

It’s usually found behind the toe grille.

Clean it with a long-handled bottle brush and a vacuum cleaner with a hose attachment.

Put on your favorite music and start your spring cleaning today. It’ll be done before you know it.

Then you can relax and enjoy your sparkling clean home.

If you’re getting ready to sell your home and need more cleaning tips to help smooth the sales process, call your favorite licensed real estate professional today!

What’s Ahead For Mortgage Rates This Week: March 4th, 2013

 

What's Ahead For Mortgage Rates This Week

March 4, 2013 by Leave a Comment

U.S. Budget Stalemate, Italian Elections Stir Concerns

Mortgage rates were lower last week as investors sought safety in bonds in the wake of US legislators’ failure to agree on budget cutbacks, and after Italy’s elections failed to reveal a leader committed to continuing economic reform.

When bond prices including Mortgage Backed Securities rise, mortgage rates typically fall.

While the March 1st deadline for passing budget cutbacks for the U.S. government passed without a resolution, emergency legislation passed last year will keep the government running until March 27.

If a budget is not passed by then, the federal government could face shutdown.

As it stands, $85 billion in cuts are scheduled over the next seven months, but this represents only about 2 percent of the federal budget.

Investor concerns are likely to rise if the March 27 deadline approaches without a resolution.

Italian Elections Influence Investor Sentiment

On Monday, Italian elections were held, but the results did not reveal a leader dedicated to continuing economic reforms necessary for stabilizing Italy’s economy.

Another round of elections may be required to determine Italy’s new leader.

There is deep conflict in Italy as citizens do not agree with the need for economic austerity measures.

As the Eurozone’s third largest economy, Italy’s division on future economic reforms raises two concerns for investors.

First, without a clear reform leader established in last week’s elections, Investors fear that austerity measures may be relaxed and increase Italy’s debt risk.

A less likely risk is that Italy may leave the EU if it cannot resolve its need for economic reforms with its citizens’ wishes.

Upcoming Economic Releases

The coming week’s scheduled economic releases include:

  • Ongoing developments regarding the U.S. budget and aftermath of the Italian elections are expected to continue influencing U.S. financial markets.
  • On Tuesday ISM Services Index for February will be released. Wednesday’s news includes the Fed’s Beige Book Report for March and Factory Orders for January.
  • Thursday’s scheduled economic news releases include Productivity and Trade Balance reports. Friday finishes the week’s economic news with the Employment report, which includes job and unemployment data for February.

As spring approaches, demand for homes typically increases, which in turn may drive up home prices and mortgage rates.

Consider getting pre-approved for a mortgage and looking for your new home sooner than later.

5 Important Tips To Save Money On Your Tax Bill

Tax Saving Tips For 2012 Tax ReturnMarch 1, 2013 by

April 15th seems a long way off, but it will be here before you know it.

Now is the perfect time to start getting your paperwork in order.

Owning real estate can make a big difference on your tax return, so make sure that you’re taking advantage of all the deductions you’re entitled to.

We’ve outlined a few below:

Mortgage Interest

Unless you paid cash for your purchase, you probably took out a loan to buy your home.

Mortgage interest is one of the best tax deductions available, so be sure to hang on to that 1098 Mortgage Interest Statement from your lender.

You can almost always deduct the entire amount of interest paid per calendar year.

Real Estate Taxes

Depending on where your property is located, you are likely paying real estate tax, either to the state or to a local governing authority.

Taxes based on property value are generally deductible as well. You may have an escrow account to hold these funds during the year, so be sure that you only deduct the amount of taxes you actually paid.

Home Equity Line of Credit

You may deduct home equity line of credit (HELOC) debt interest as long as you are legally liable to pay the interest, the interest is paid in the tax year, and the debt is secured by your home.

The home equity debt has a limit of up to $100,000 ($50,000 if married filing separately).

Mortgage Insurance Premiums

Depending on how your loan is structured, you may have mortgage insurance. With the recently passed American Tax Relief Act of 2012, all mortgage insurance premiums are tax deductible for the 2012 and 2013 tax year. There are some qualifications, so check with your tax advisor.

Mortgage Interest on Land

If you purchased land with the intent to build, the interest you have paid may qualify as deductible mortgage interest as long as the structure becomes your qualified residence within a 24-month period.

This deductibility of bare land mortgage interest is a tricky one. You can see the IRS explanation here.

Your home could be one of your greatest resources for reducing your tax liability. Most times these deductions are itemized on a Schedule A (Form 1040) when you prepare your taxes.

A great next step is to call a qualified tax planning professional. Please feel free to contact us if you would like a referral.

Existing Home Sales Rise As Home Inventory Shrinks

Existing Home Sales Numbers ReleasedFebruary 28, 2013 by

Home sales rose for the 11th consecutive month according to the National Association of REALTORS® Existing Home Sales Report for January.

This is the first time this has occurred since the period between July of 2005 and May of 2006.

National Average Home Price Up Over 12% Annually

The national average home price in January was $173,600, which is 12.3 percent higher than for January 2012.

Calculated on a seasonally-adjusted annual basis, Existing Home Sales data is compiled using completed sales of single family homes, condominium units and co-ops.

January’s existing home sales rose by 0.4 percent to 4.92 million sales nationally as compared to December’s revised annual rate of 4.90 million sales nationally.

National sales of existing homes increased by 9.1 percent as compared to January 2012.

Regional Home Sales Support Housing Recovery

Regional home sales for January suggest more good news for housing markets. Seasonally- adjusted annual home sales rose in all regions of the U.S. except in the West, while median home prices rose for all regions.

Northeast: Home sales were up by 4.8 percent in January to 650,000 sales, which is 12.1 percent more homes sold than for January 2012. The median home price rose by 2.4 percent from January 2012 to $230,500.

Midwest: Annual home sales in January increased by 3.6 percent to 1.16 million; this is 17.2 percent higher than for January 2012. The median home price in the Midwest rose to $131,800, an increase of 8.6 percent as compared to January 2012.

South: Home sales were up by 1 percent to 1.96 million sales in January; this represents a 14.0 percent increase in annual sales as compared to one year ago. The average home price for the South was $152,100, an increase of 13.4 percent over January 2012.

West: Home sales fell by 5.7 percent to an annual rate of $1.15 million. This represents a 5.7 percent decrease in sales from one year ago. The median home price in January was $239,800 and was 26.6 percent above the region’s median sale price for January 2012.

A falling inventory of homes for sale may be holding back buyers; the inventory of homes for sale fell to a 4.2 month supply from December’s 4.5 month supply of homes. A 6-month supply of homes is considered average.

Home Prices May Rise Quickly

While the spring home buying season will likely see more homes come on the market , economists caution that home prices could rise faster than expected due to increasing demand. A seller’s market could be in the making.

Mortgage rates also appear to be rising; now may be your best time for gaining the advantage of relatively low home prices and mortgage rates.

Is Downsizing The Next Big Trend In Homes?

 

Z Glass Micro Dwelling by Tumbleweed Tiny House Company

February 27, 2013 by

The real estate market has started to recover from the downturn over the last few years in many areas of the country, and more people are thinking about buying a new place to live.

With this new energy in home buying, an interesting trend seems to be developing.

Instead of going for larger homes, which was an overwhelming trend in years past, many people are choosing micro-dwellings.

What is a micro-dwelling?

There are a number of different styles of micro dwellings being built. This is a relatively new concept for homes in the United States and individual creativity abounds in this space.

The most common factor in micro-dwellings are their size. They tend to be less than 500 square feet of living space.

Some densely populated metropolitan areas like San Francisco and New York City are planning apartments as small as approximately 300 square feet!

Think this shrinking of real estate space applies only to multi-family dwellings?

Think again. You can also find tiny single-family homes — some of which are even portable.

If you’re still not convinced, read on to discover a few of the factors drawing buyers to smaller living spaces.

A lower price tag – The cost of these homes can be significantly less than that of standard homes, which means you may not have a large mortgage over your head for the next 30 years.

More free time – A smaller house means less cleaning. Who isn’t on board with that idea?

Less clutter – If your home is less than 500 square feet, you have to get rid of everything you don’t absolutely need.

Mobility – Many of these tiny homes are equipped with wheels or built-on trailers, so moving is no longer the stressful and expensive undertaking it used to be. Simply close the door and go!

Smaller is greener – It makes sense that if your home is smaller, you will automatically reduce your energy consumption, which means more money in your pocket every month and a smaller carbon footprint.

Micro-living might not be for everyone. It does offer an option for those who are just starting out, those who love to travel, or those nearing retirement.

Fed Considers Future of Quantitative Easing

Fed-Minutes-Released-252

February 26, 2013 by

The Federal Open Market Committee (FOMC) released minutes from its January meeting last Wednesday, as it generally does three weeks following the most recent meeting.

The FOMC is a committee within the Federal Reserve System tasked with overseeing the purchase and sale of US Treasury securities by the Fed.

The Federal Reserve makes key decisions regarding interest rates and looks to this committee for advice on how and when to take action.

The Future Of Quantitative Easing

One of the main topices that Fed leaders discussed was the future of its ongoing program of quantitative easing (QE).

Currently, the Fed plans to continue its monthly purchase of treasury bonds and mortgage-backed securities (MBS) with the objective of keeping the inflation rate at or below 2 percent.

The Fed plans to phase out quantitative easing when the national unemployment rate reaches 6.5 percent.

Fed leaders opposed to current quantitative easing brought up concerns about risk exposure to the Fed as it continues acquiring large quantities of bonds and mortgage-backed securities.

Other concerns included the potential for negative impact on financial markets if the Fed sustains its current policy of quantitative easing.

The Risk Of Inflation Creates Pause

Inflationary risks were also cited as a reason for re-evaluating the current policy for quantitative easing.

As the fed continues to purchase more and more mortgage-backed securities to keep interest rates down, a higher potential risk for inflationary pressure results.

Rising inflation rates would cause mortgage rates to worsen.

FOMC members concerned about current policy for quantitative easing suggested that the Fed should prepare to vary the timing of its purchases according to economic conditions rather than committing to scheduled purchases of specific amounts of bonds and mortgage-backed securities.

The next Federal Open Market Committee meeting is scheduled for March 19-20, 2013.

What’s Ahead For Mortgage Rates This Week: February 25th, 2013

What's Ahead This WeekFebruary 25, 2013 by

A quiet past week in economic news caused mortgage rates to worsen slightly.

This week, however, will be packed with economic reports which may have an impact on interest rates going forward.

Freddie Mac reported that the average rate for a 30-year fixed rate mortgage rose by 3 basis points from 3.53 percent to 3.56 percent with borrowers paying 0.8 in discount points and all of their closing costs.

The average rate for a 15-year fixed rate mortgage was unchanged from last week at 2.77 percent with borrowers paying 0.8 in discount points and all of their closing costs.

In other economic news, the Consumer Price Index (CPI) for January fell slightly to 0.0 percent as compared to Wall Street expectations of 0.1 percent and December’s reading of 0.1 percent.

The Core CPI, which measures consumer prices exclusive of volatile food and energy sectors, was 0.3 percent for January and surpassed analyst expectations of 0.2 percent and December’s reading of 0.1 percent.

Inflation Remains Low

These readings remain well below the 2.5 percent inflation level cited by the Fed as cause for concern.

According to the Department of Commerce, Housing Starts for January fell to 890,000 from December’s 954,000 and below Wall Street projections of 910,000.

These seasonally adjusted and annualized numbers are obtained from a sample of 844 builders selected from 17,000 newly permitted building sites.

Falling construction rates could further affect low supplies of homes reported in some areas; as demand for homes increase, home prices and mortgage rates can be expected to rise.

Full Economic Calendar This Week

This week’s economic news schedule is full; Treasury auctions are scheduled for Monday, Tuesday and Wednesday. New Home Sales will be released Tuesday.

Fed Chairman Ben Bernanke is set to testify before Congress on Tuesday and Wednesday.

Wednesday’s news includes the Pending Home Sales Index and Durable Orders.

Thursday’s news includes the preliminary GDP report for Q4 2012, the Chicago Purchasing Managers Index, and weekly jobless claims.

Friday brings Personal Income and Core Personal Expenditures (CPE).

Consumer Sentiment, the ISM Index and Construction Spending round out the week’s economic news.

Will You Need Private Mortgage Insurance on Your Mortgage Loan?

 

Private Mortgage Insurance

February 22, 2013 by

Have you heard the term Private Mortgage Insurance (PMI) when looking to finance real estate?

You may be wondering what PMI is and how you know when you need to purchase it.

These answers can be hard to find among all the real estate jargon you might be hearing lately.

Below is the short version of what you need to know.

What is Private Mortgage Insurance?

Private Mortgage Insurance is an insurance premium required by some lenders to offset the risk of a borrower defaulting on their home loan.

When you put down less than 20 percent of the real estate’s purchase price, the lender will generally require that PMI is added to the loan.

It is usually added into the monthly mortgage payment until the equity position in the real estate reaches 20 percent. However, there may be other options available in your area.

Under the current law, PMI will be canceled automatically when you reach 22 percent equity in your home, if you are current on your payments.

If you aren’t current, the lender may not be required to cancel the mortgage insurance because the loan is considered high-risk.

After getting caught up on your payments, the PMI will likely be cancelled. Any money that you have overpaid must be refunded to you within 45 days.

What if Your Real Estate Increases in Value?

With a conventional loan, it may take as many as 15 years of a 30-year loan to pay your balance down 20 percent making the minimum monthly payment.

But, if property values in your area rise, you might be able to cancel the PMI sooner.

Some lenders may be willing to consider the new value of your home to determine the equity in your home.

You may, however, be responsible for any fees, like an appraisal, that are incurred to assess the new value of your property.

In the end, private mortgage insurance is likely a good option if you can’t afford a down payment of 20 percent of the purchase price.

Now May Be A Very Good Time To Take Action

With all of the activity happening the housing market, now may be the best time for you to purchase your new home.

A smart next move would be speaking with a qualified home financing professional to learn which programs and down payment options are available in the area.