Mortgage Business

Nowhere To Go From Here

20140309-080351.jpgThat is right. We have nowhere to go from here — and that fact represents good news. Each week the markets watch the first time claims for unemployment to get a reading on the employment numbers. However, that practice may very well have run its course with regard to its importance in the short-term. It is a matter of math. When claims dip below 300,000, as they have for several weeks this year, there is not much room for them to decrease further. A recent article from Bloomberg indicated that we are now at the level of claims not seen since 2006. And there are over five million more people who are participating in today’s labor force as compared to 2006.

Indeed, during the three previous expansions, weekly jobless claims averaged around 275,000, which is just below this year’s low. Again, we have millions more in the labor force now. However, don’t think that we have reached full employment. We have plenty who have exhausted their benefits and represent the long-term unemployed. Others are under-employed, which might mean they are employed part-time but desire to be employed full time. Add this to those who are laid off even in a better economy and there is room for improvement in the employment numbers even if the weekly claims do not move down from here.

Friday’s jobs numbers tell us that we are still headed in the right direction with regard to returning to a healthy labor market and ultimately a healthy economy. Not only did the unemployment rate fall below 6.0% for the first time in six years with the addition of almost 250,000 jobs, but there was a significant upward revision of the previous months’ numbers, which means the pause in August was not as severe as we originally thought. When the Federal Reserve Board’s Federal Open Market Committee meets later this month, these numbers will be on the table for analysis. Until then, it will be interesting to see if the other economic reports for September follow this stronger trend.


The Markets. Fixed rates were stable in the past week. Freddie Mac announced that for the week ending October 2, 30-year fixed rates eased to 4.19% from 4.20% the week before. The average for 15-year loans was unchanged at 3.36%. Adjustables were also down slightly, with the average for one-year adjustables falling one tick to 2.42% and five-year adjustables decreasing to 3.06%. A year ago, 30-year fixed rates were at 4.22%, very close to today’s levels. Attributed to Frank Nothaft, vice president and chief economist, Freddie Mac — “Rates on home loans were flat to slightly down across the board as GDP was revised up from 4.2 percent to 4.6 percent for the second quarter and the S&P/Case-Shiller National House Price Index was up a seasonally adjusted 0.2 percent for July and up 5.6 percent from the prior July. Pending home sales data were less optimistic, though, down 1 percent in August.”   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 October 3, 2014

Daily Value Monthly Value
October 2 August
6-month Treasury Security 0.03%  0.05%
1-year Treasury Security 0.10%  0.11%
3-year Treasury Security 1.01%  0.93%
5-year Treasury Security 1.70%  1.63%
10-year Treasury Security 2.44%  2.42%
12-month LIBOR  0.559% (Aug)
12-month MTA  0.115% (Aug)
11th District Cost of Funds  0.667% (Aug)
Prime Rate  3.25%

  Sales of new single-family houses in August 2014 were at a seasonally adjusted annual rate of 504,000, up from July’s printing of 427,000, the fastest rate in six years and the biggest monthly jump since January 1992. This August reading is 18% above the revised July rate and is 33% above the August 2013 estimate of 379,000. The biggest gains and by far the reason for the big increase were new home sales in the West, one of the two largest housing markets, along with the South. New home sales in the West were up 50% over July. The South saw an 8% increase. The median sales price of new houses sold in August 2014 was $275,600; the average sales price was $347,900. The seasonally adjusted estimate of new houses for sale at the end of August was 203,000. This represents a supply of 4.8 months at the current sales rate. Source: HousingWire

Nationwide, the typical oceanfront or lakefront, single-family home is worth more than double the median value of all homes, and in some communities the median waterfront house could be worth ten or more times the median value of non-waterfront houses, according to a new analysis by Zillow. In the U.S. at the time of this analysis, the median single-family home was worth about $171,600, while the median waterfront house was valued at $370,900, a waterfront premium of 116.1 percent. “The allure of ocean and lakefront living is powerful and undeniable, and millions of homeowners nationwide dream of one day owning a home on the water. But those dreams come at a price,” said Zillow Chief Economist Dr. Stan Humphries. “Waterfront properties are both relatively scarce and highly coveted, and that high demand and limited supply leads to higher home prices. Additionally, added insurance, floods, environmental mitigation and infrastructure costs are often part of the tab when buying a waterfront home. Still, as long as buyers understand the added costs and potential headaches, waterfront living is likely to remain one of life’s simple pleasures for many, many years to come.” The median waterfront home value represents the median value of all single-family waterfront homes in a given community. The index includes single-family homes located 150 feet or closer to the waterline of an ocean or lakes with a total combined size of 10 square kilometers or greater. Properties separated from direct waterfront by a road with a speed limit of 25mph or less are also considered waterfront. Riverfront properties were not included in this analysis, nor were condominium or co-op housing units. Source: NMP Daily

The Bank of Mom and Dad is playing a growing role in a housing recovery struggling to provide more traction for the U.S. economy. Last year, 27 percent of those purchasing a home for the first time received a cash gift from relatives or friends to come up with a down payment, according to data from the National Association of Realtors. That’s up from 24 percent in 2012 and matches the highest share since the group began keeping records in 2009. Those numbers will probably keep growing this year as younger Americans remain constrained by student debt, tough entry into the job market and stricter lending rules that require more cash up front. At the same time, rising stock and property values give their baby boomer parents the ability to assist those wanting to lock in near record-low borrowing costs. The inability to come up with the down payment was the top reason for renting rather than buying property, according to the Federal Reserve’s report on the 2013 economic well-being of households issued in July. The report also showed 10 percent of those leasing apartments last year were looking to buy a house. Deborah Baisden, a Realtor with Prudential Towne Realty in Virginia Beach, Virginia, is witness to the pickup in cash gifts, particularly among parents assisting their children. “We’re finding more and more parents are gifting money,” Baisden said. As fewer deals and less inventory prompt investors to retreat, the field may soon open up for first-time buyers as sellers look to expand the market, said Lawrence Yun, NAR’s chief economist. “With the investors stepping away, for some first-time buyers and millennial buyers, they have less competition,” Yun said. “So it would be an opportune time to enter the market.” Source: Bloomberg Financial

If you would like a copy of an article: “Parents, Do You Want to Help Your Children?” please contact us.  

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