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Economists: Housing inventory could soon turn into an emergency

Economists: Housing inventory could soon turn into an emergency

Now, economists are saying that drop could intensify in the months ahead as building permits also saw a drop in May. “One thing that’s moving up is the housing costs for consumers: higher home prices and higher rents.” And NAR wasn’t the only one alarmed by the survey’s results – another expert explained the importance of watching the market to see if the decrease is a new trend. “The industry is already facing an inventory shortage, which is driving up prices, so these results indicate the demand-supply gap could get worse and further impact affordability for certain segments and markets.” One economist, who served as chief economist at Fannie Mae for more than 20 years, said the drop was surprising, and that the industry expected a modest increase of about 1.2 million units. “Additionally, mortgage rates remain very low and mortgage credit availability, while much tighter than in last decade's housing boom, has eased considerably in recent years.” However, the National Association of Home Builders insists this drop was not unexpected, and that it falls in line with the findings of the most recent NAHB/Wells Fargo Housing Market Index. “Today's housing starts numbers are consistent with the decline in the June NAHB/Wells Fargo Housing Market Index,” said Robert Dietz, NAHB senior vice president and chief economist. “While overall confidence in the housing market and economy continues to strengthen, a shortage of skilled workers is starting to press on the industry.” But the report did still have its positive side, as one expert pointed out. “With completions up 5.6% from last month and 14.6% from a year ago, these new homes prevent the number of properties the market from falling too rapidly.” The chart below from First American Financial Corp. shows that housing supply is struggling to keep up with the increase in housing demand. Click to Enlarge (Source: First America, HUD, Census Bureau) “Since 2009, new housing supply has been falling short of new housing demand,” First American Chief Economist Mark Fleming said. “The shortfall was the largest in 2011, 465,000 housing units, and cumulatively through 2015 the total shortfall has been 2.2 million housing units.” “Currently, I estimate that the amount of housing supply necessary to just keep pace with demand is probably around 1.5 million housing units a year,” Fleming said. “Housing completions at 1.1 million SAAR this month falls short of what is needed.”
Consumer confidence drops to 7-month low

Consumer confidence drops to 7-month low

Consumer confidence drops to 7-month low. The Index of Consumer Sentiment dropped to 94.5 at the beginning of June, down 2.7% from last month’s 97.1 but still up 1.1% from 93.5 last year. “The modest early June drop of 2.6 points in the Sentiment Index masks a much larger decline since June 8,” Survey of Consumers Chief Economist Richard Curtin said. During non-recessionary years the average is 87.6. However, the size of the partisan difference between Democrats and Republicans remained largely unchanged at 51.2, compared to the 55.6-point difference the month before. “The recent erosion of confidence was due to more negative perceptions of the proposed economic policies among Democrats and the reduced likelihood of passage of these policies among Republicans,” Curtin said. The Index of Consumer Expectations also decreased from last month’s 87.7, dropping 3.4%. However, it increased 2.8% from last year’s 82.4 to 84.7. “Fortunately, a strong job market, improved household income and wealth have provided a financial buffer against rising uncertainties,” Curtin said. “The drop in the University of Michigan index of consumer confidence to a seven-month low in June isn’t overly concerning as confidence had been unusually elevated for some time,” Capital Economics Economist Andrew Hunter said.
A reverse mortgage sounds great, but there are risks

A reverse mortgage sounds great, but there are risks

It’s called a Home Equity Conversion Mortgage, or HECM. HUD regulates HECMs, or at least it says it does. It lets people 62 and older, many with little if any financial assets, tap into their home equity to get either immediate or monthly cash payments to help pay bills. But here’s the rub: Because the mortgage is not being repaid, all the interest owed as well as five different fees are added to the mortgage balance. If the Smiths die at home and have no heirs, then they got money, got to live in their house until the end. But if they die with heirs or if they need to move to a nursing home or near their children, the Smiths’ share of the proceeds from their house’s sale becomes a big deal. Second, many of the HECM mortgage rates are adjustable. If the Smiths are 62, have a $300,000 house and borrow $100,000 at a 6 percent rate on their HECM, they will owe $320,000 20 years later. HUD’s website doesn’t whisper, let alone scream, “RISK,” but an HECM comes with a huge, undisclosed risk of the Smiths having to move or dying and they or their heirs losing a good chunk — if not all — of their home to ABC. But you can make gifts to heirs through time and buy annuities from multiple insurers to hedge insurer risk.
Small Is the New Big: Home Size Preference Shrinks

Small Is the New Big: Home Size Preference Shrinks

Small Is the New Big: Home Size Preference Shrinks. First-time homebuyers are shifting housing industry standards when it comes to home design preferences—and, according to the latest Home Design Trends Survey by the American Institute of Architects (AIA), one of the most significant changes is the end of the era of expansive property and square footage. Small, simply, is the new big. “With younger households that are increasingly entering the market looking for more affordable options, home sizes appear to have peaked for this economic cycle,” said Kermit Baker, chief economist of the AIA, in a statement on the survey. Smaller homes are generally more affordable, which is key for many first-time homebuyers squeezed by high home prices and student debt. Small homes, however, are scarce in most housing markets. Aside from less living space, the architecture professionals surveyed see the following trends taking shape: In-Home Accessibility Single-Floor Plans Open-Concept Layout Informal Spaces Source: American Institute of Architects (AIA) For the latest real estate news and trends, bookmark RISMedia.com. Facebook Comments
Why living near noisy restaurants could affect your mortgage

Why living near noisy restaurants could affect your mortgage

Why living near noisy restaurants could affect your mortgage. Comments (0) If you live near somewhere that could cause noise or smells nearby, lenders could see a property as less desirable. Even living near a Nando's restaurant could restrict mortgage companies for lending to you. In a report, he described his flat as 'in a large, newish block, with the chicken specialist close by and a small Tesco on the other side of the building'. A home that matches this criteria is easier to sell, so if the lender is forced to repossess the house if the borrower misses payments, they can in theory reclaim their money quicker. Here are a few examples of what could put a lender off a property: It is above or near commercial premises. Your own personal circumstances could result in you being declined by lenders, including; You're in your 40s or 50s and a bank won't lend into your retirement years – as many people want mortgage lengths of 20 years or more. If you have less than two or three years of accounts to prove your income. A man has been found dead in a car parked in Ivybridge, south Devon. He died on Monday surrounded by loved ones, after being told he had less than a year to live.
Choosing the right mortgage lender can save you money

Choosing the right mortgage lender can save you money

Las Vegas is heating up again, and that applies to a lot more than just the weather. “With the tremendous growth and development taking place now in Las Vegas — upward of $15 billion — it not only brings construction work but also jobs for supporting and complementary industries, too,” he said. “Those jobs mean security and improved financial resources that make it possible for people to seriously consider owning a home – either again, or for the first time.” The growth Piette is referring to is happening throughout the valley in gaming and nongaming sectors. “Most people don’t realize, though, that it’s not only the home itself that’s the expense – the mortgage loan can be costly, too … especially if you choose the wrong mortgage lender. The truth is, a borrower can go to two different lenders, get the exact same loan terms and interest rate, but one of those lenders will cost them – right out of their pocket — from $4,000 to $8,000 or even more. Think about that: Same loan. “At Premier Mortgage, we realize that many borrowers don’t know what to look for or which questions to ask when they need a loan. “As a mortgage broker, Premier Mortgage Lending is able to offer a true No Fee Mortgage Loan. “Remember, getting a mortgage loan isn’t like shopping for insurance,” Piette said. And what’s the advantage in that to you?” If you’d like to learn about all the mortgage loan opportunities available to you from locally owned, Las Vegas-based Premier Mortgage Lending – including the true No Fee Mortgage Loan — visit www.PremierMortgageLending.com or call 702-485-6600 to schedule an appointment.

5 simple steps for creating the right foundation for your real estate business

The key to building a strong business is respecting your clients, having a plan, relentless follow up, social media and working your database. I think it’s fair to say that many agents are running businesses with no direction or guidance, but here, I’ve provided some simple tips to help you build a strong business. I have seen agents of mine put shades up for clients because they are out of town. I have witnessed a potential client almost give the listing to my agent and then get a cash offer before signing the listing agreement — and then see my agent tell the client “although I am not on the deal, if you have any questions or feel unrepresented, please let me know.” In that case, the deal fell through, and guess who got the listing? It’s incredible how many agents do not follow up like a mad person. People ask me if their Facebook should be private or public; if it’s a private thing — don’t post it! Post on social media eight to 10 times a day. Introduce yourself and your business to five new people per day. Make your database work for you. Connect with him on Facebook.
Best cities for first-time homebuyers

Best cities for first-time homebuyers

Best cities for first-time homebuyers. Booming health, education, and technology industries, as well as several massive infrastructure projects underway, have helped push Orlando's unemployment rate down to just 3.8%. That means there's plenty of opportunity for potential homeowners to land a good job to ease the burden of saving for a down payment and buying a house. New homeowners will find plenty to do in the area, from a lively nightlife to the beaches just a short drive away. "Orlando is not just the tourist town that it's known as," says Bruce Elliott, president of the Orlando Regional Realtor Association. Source: Zillow The Best cities for first-time homebuyers top 10 is based on Zillow's "First-time Home Buyer Index." The index captures a balance of five metrics: low median home values for an affordable down payment, a strong home value forecast to indicate a good start to growing equity, a larger inventory-to-household ratio to capture available supply, a greater share of listings with price cuts to surface less competitive buying experiences, and a faster breakeven to demonstrate a strong incentive to buy over rent. These five metrics are ordered and metros are scored on a scale from 0 to 10 along a uniform distribution. These five scores are then averaged and the average re-scaled to range from 0 to 10. 1 of 10
What the latest Fed rate hike means for mortgage rates

What the latest Fed rate hike means for mortgage rates

Fed Chair Janet Yellen and her Federal Open Market Committee counterparts go out of their way to make sure short-term interest rate moves are anything but a surprise to world markets. The Fed hikes, mortgage rates head-fake Before this third short-term rate hike in just six months, fixed-rate mortgages were barely off 2017 lows. The experts have been predicting a gradual rise in home loan interest rates for months, but rates have head-faked their way lower since the Fed’s last rate increase in March. “So central banks elsewhere are still aggressively stimulating their economies and keeping their rates low, and that’s acting as a bit of an anchor on longer-term rates.” With this foreign demand for safe assets, the MBA expects U.S. mortgage rates “are going to be held back by the lower rates abroad over the next couple of years.” Where mortgage rates will end 2017 The three economists we interviewed say they expect the Fed to raise rates by another quarter-point before the end of the year. That will make for a full percentage point increase within one year. “This move by the Fed to increase short-term rates was expected, and we expect to see another increase from them before the end of the year,” says Sean Becketti, chief economist for Freddie Mac. “We think [the Fed will] hike once more in September and then probably three or four times in each of the next couple of years,” Fratantoni says. The Fed is not only raising interest rates The Fed is planning another action that could affect mortgage rates: selling off its portfolio of mortgage-backed securities. “For example, with fixed-rate loan rates up by 0.5 [percentage point] since last summer, and house prices in national indexes up at least 5%, the monthly principal and interest payment is more than 10% higher than it was last summer, adding to affordability challenges for first-time buyers,” Nothaft says. Hal Bundrick is a staff writer at NerdWallet, a personal finance website.