Mortgage Business

December 20, 2011 Real Estate Report

Real Estate Trends Newsletter -- A weekly news update for mortgage professionals

 

Jeff Baxter
Prosperity Mortgage
33298 South Coastal Highway
Bethany Beach,DE 19930
jeff.baxter@prosperitymortgage.com
302-537-5076
302-602-1067

MLO: 191033
Branch/Company ID: NMSLR ID 70353

I’ve been a banker, marketer, and business owner for over 30 years. As a mortgage banker with Prosperity Mortgage since 2003, I work in all the beach markets in southern Delaware and have been a consistent, “go to” lending partner for hundreds of real estate professionals.

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December 20, 2011

ECONOMIC COMMENTARY
 Happy Holidays

As we all take a break during the Holidays, we can reflect upon the events over the past year. It was certainly an eventful year–from global natural disasters to revolutions in many countries to the European debt crisis. Any one of many events could have brought our economy back into recession, yet we go into the New Year with renewed financial vigor. The recovery from our recession has been so painfully slow that it is hard to see the progress, but it is there. For example, during the height of the crisis, first time claims for unemployment peaked at 650,000. Last week, the number was below 370,000, not far from where it stood at certain points in 2005 and the lowest since 2008. We were also losing close to 800,000 jobs per month during the height of the recession and now we are adding over 100,000 jobs per month. Does this mean we are out of the woods? Absolutely not. The unemployment rate was a stubbornly high 8.6% last month and it was approximately 4.5% before the recession hit. On the other hand, we were at 10% just a few months ago, so again we are moving in the right direction.

Will real estate recover? Here is a number that we keep reminding our readers about. We added almost 30 million people in the United States during the past ten years. Even those who are foreclosed upon will need housing. Right now we are not building enough housing to accommodate this growth. During the past five years, we have survived by "doubling up." But as the economy recovers our children will be moving out and household formulation will accelerate. This all amounts to pent up demand. The statistics in real estate are starting to turn with the inventory of existing homes for sale falling from 3.8 million to 3.3 million from October of last year to October of this year. Yes, there is still a large "shadow" inventory of homes hanging over the market, but actually we could see a major increase in homes sold next year as banks realize that the homes they are holding will sell and they could start releasing their inventory more quickly. This scenario may not bode well for home prices in the next few months, but clearing out this inventory is essential for the market to turn around and many banks are now fixing up properties before they sell them so that their REO inventory does not prove to be as much of a drag upon prices. The bottom line is that early 2012 might well be the last great opportunity to purchase our real estate on sale and at such low rates.

WEEKLY INTEREST RATE OVERVIEW
The Markets. Fixed rate loans matched a record low last week. Freddie Mac announced that for the week ending December 22, 30-year fixed rates averaged 3.94%, down from 3.99% the previous week. The average for 15-year fixed fell to 3.21%. Adjustable rates were stable, with the average for one-year adjustables increasing slightly to 2.81% and five-year adjustables decreasing to 2.86%. A year ago 30-year fixed rates were at 4.83%, down almost a full percent from year-to-year. Attributed to Frank Nothaft, Vice President and Chief Economist, Freddie Mac, "Rates were at or near all-time record lows this week. In its December 13th monetary policy announcement, the Federal Reserve reiterated the housing market remains weak. In addition, serious delinquency rates (90 or more days delinquent plus foreclosures) on home loans increased slightly between June 30 and September 30 of the year, breaking a six-quarter consecutive decline, according to the Mortgage Bankers Association." Rates indicated do not include fees and points and are provided for evidence of trends only. They should not be used for comparison purposes.

Current Indices For Adjustable Rate Mortgages
Updated December 16, 2011 

 

Daily Value

Monthly Value

 

Dec 15

November

6-month Treasury Security

0.05%

 0.05%

1-year Treasury Security

0.12%

 0.11%

3-year Treasury Security

0.37%

 0.39%

5-year Treasury Security

0.86%

 0.91%

10-year Treasury Security

1.92%

 2.01%

12-month LIBOR

 

 0.993% (Nov)

12-month MTA

 

 0.196% (Nov)

11th District Cost of Funds

 

 1.218% (Oct)

Prime Rate

 

 3.25%

REAL ESTATE NEWS
 Consumer predictions for U.S. home prices moved into positive territory for the first time in six months, according to a monthly survey from Fannie Mae. For its November reading, Fannie Mae said respondents now expect home prices to edge up 0.2% over the next year, compared with the 0.3% decline predicted in October. Still, concerns about the direction of the U.S. economy remain, Fannie Mae said. Fully 75% of respondents in November’s survey said they believe the U.S. economy is on the wrong track, easily out sizing the 16% of respondents who said the economy is heading in a positive direction. Regarding personal finances, 18% said they expect their financial situation to worsen over the next year, unchanged from October. And 66% reported their income is about the same, the highest number ever to report that response. "Most Americans expect no improvement in their personal financial situation in the next 12 months and will likely remain wary about undertaking the significant financial obligation associated with homeownership," said Doug Duncan, chief economist of Fannie Mae. The monthly survey is based upon a poll of roughly 1,000 adults via telephone from Nov. 1 to Nov. 25. Source: The Washington Post

Sixty percent of real estate professionals advise their sellers to list a home during the holidays because it’s a good time to sell, according to a new survey conducted by Realtor.com. Why are the holidays such a good time to sell? Seventy-nine percent of the agents surveyed said that more serious buyers come out during the holidays, and 61 percent say less competition from other pr! operties make it a great time to sell. Plus, 17 percent of agents say the cold weather is actually a benefit, making homes feel cozier. But online listing photos become even more crucial during the holiday season, according to the survey. Slightly more than half of agents say that the photos are more important because sellers tend to offer less open houses around the holidays, and so the online photos help buyers decide the properties to see and which ones to possibly bypass. The biggest hurdles sellers face during the holidays, however, are keeping a home ready to show (clean and staged) as well as winter weather conditions and buyers’ vacation schedules, the Realtor.com survey found. Source: Realtor.com

Homeowner insurance policies can vary greatly, and if home owners aren’t careful, they may find their claims denied when disaster strikes, according to a study to be published early next year by the University of Chicago Law Review. While home insurers once used standard policy forms by the Insurance Services Office, now some are coming up with their own policies and a few tweaks in the wording can mean trouble for some home owners, according to the study. Home owners should read the fine-print and carefully review their policies to examine what’s covered and what’s not, the study notes. For example, some policies include mold and lead coverage; other policies do not. According to United Policyholders, here are a few questions home owners can ask insurance agents when shopping around for a home owner’s insurance policy: 

  • What is the coverage for water damage from sewer or pipe problems? 
  • What is the coverage for any damage to the foundation — is it completely covered, limited, or excluded completely? 
  • Will items be paid at “replacement value” or “actual cash value”? 

Study author Daniel Schwarcz, a University of Minnesota Law School associate professor, told The Wall Street Journal that he is urging state insurance departments to post their insurance policies online so they can be reviewed closer by consumer groups and home owners. Source: The Wall Street Journal

 

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All first mortgage products are provided by Prosperity Mortgage Company. Prosperity Mortgage Company may not be available in your area. Wells Fargo Home Mortgage is a division of Wells Fargo Bank, N.A. Prosperity Mortgage Company is licensed in New Jersey as a Department of Banking Mortgage Banker and in Pennsylvania by the Department of Banking.

  

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