Real Estate News - Greg Timms

On The Brink

Last week we reported that the rate of homeownership remains stagnant. This week we learned of a new survey from the Gallup people that seems to show that could be on the brink of change–maybe even massive change. The survey, conducted among both homeowners and non-homeowners, indicates that more than half of the latter don’t plan to stay that way.

Forty-nine percent of those who don’t currently own one said they expect to buy a home within the next five years, (10% within one year) and another 20% have a ten-year plan. That leaves only 28% with no current intention to buy. When Gallup conducted the same survey in April of last year, 38% of respondents were content with their status quo.

As might be expected, these homeowners-in-waiting are clustered on the low end of adulthood. Fifty-two percent of 18 to 34-year-olds have a five-year window (for more than half, that window is a year) as do 58% of those aged 35 to 54. Less than a third of non-homeowners 55 years or older have homebuying plans.

Let’s hope they can find a home to buy. Gallup says the homeowners it questioned were prepared to stay put. Only 4% expect to sell within 12 months and another 20% within five years. Nearly two-thirds say they won’t be moving “in the foreseeable future.”

April Jobs Report Raises Hopes

The only hard economic numbers this week were those for employment in April. They were much better than those for March (which got even worse in the retelling.) The Labor Department said there were 211,000 new jobs created during the month and the unemployment rate ticked down to 4.4% the lowest rate since 2001. The March report originally reported a dismal 98,000 new jobs; that number was revised down this month by another 19,000.

The chicken and the egg has long been a “thing” in real estate–should a homeowner find a new home before he sells the old one or vice versa. Freddie Mac’s blog this week suggests a variation. When it comes to home buying, the house or the mortgage?

Experts agree, Freddie says, that you should fit your mortgage to your finances, not to a house. The key is knowing, not just to know how much mortgage you can afford, but if your budget can cover expenses for upkeep, utilities and major repairs like a new furnace.

In other words, before there is either a chicken or an egg, there is a need to get a handle on your finances. It’s what we do–give us a call.

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Posted on May 12, 2017 at 8:14 pm
Greg Timms | Posted in Economical Updates, Real Estate News | Tagged fannie mae, freddie mac, mortgage, news, real estate update, san diego, san diego real estate

Blizzard of Good News

Good housing and economic news fell almost as thick and fast as snow on the East Coast this week. Hard to know where to start digging out.

Proceeding chronologically, the first up was another very good Labor Department report announcing the creation of 235,000 new jobs in February. Below the headline number was some especially good news for the housing industry; 58,000 of those jobs were in the construction sector. The January job creation number was upgraded by 11,000 to 238,000 and earnings ticked up another 0.2%.

Highest Since 2005

New home builders displayed the strongest confidence in their market since June 2005 in their responses to the National Association of Home Builders monthly survey. The index drawn from that survey surged by six points.

That confidence was reflected to a certain degree in the Census Bureau’s residential construction report for February. While permits were down by 6.2%, housing starts were up 3.0%. In addition, both numbers were higher than those in February 2016, by 4.4% and 6.5% respectively. Even better, single family numbers were strong, boding well for growing the dismal inventories. Single-family permits rose 3.1% from January and starts were up by 6.5%.

One Down, Two To Go

The Federal Reserve’s Open Market Committee did as expected at their meeting this month, raising the fed funds rate a quarter point to a range of 0.75% to 1.0%. What sent the markets dancing was the post-meeting announcement that they expect to do it two more times this year. Why was that happy news? Even though FOMC had more or less promised three rate hikes this year, the markets were sure they really meant four.

There will be a notable change in the way consumer credit reporting firms will keep score. Under some pressure from regulators, the three biggest, Equifax, Experian, and TransUnion, announced that starting July 1 they will remove all negative information about tax liens or court judgments from consumer records unless they contain at least three out of four specific pieces of identification–name, address, and either Social Security number or date of birth. New reports without this info will also be rejected.

FICO estimates that about 12 million credit scores will be affected–about 6% of the total. The impact will be small–probably less than a 20-point boost in each case.

With the “unwintery” weather enjoyed by most of the country–up until this week of course–the home sales reports, both new and existing homes–for February could give us a first look at the spring market. Hopefully they will provide the good news headlines next week.

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Posted on March 17, 2017 at 5:10 pm
Greg Timms | Posted in Economical Updates, Real Estate News | Tagged fannie mae, freddie mac, mortgage, news, real estate, real estate update, san diego home sales

Tough Sledding

Despite taking a dip in December, existing home sales still closed out 2016 as their best year since 2006. The National Association of Realtors (NAR) said that over the 12 months an estimated 5.45 million single-family houses, townhomes, condos, and cooperative apartments changed hands. This was 200,000 more units than sold in all of 2015 and the highest number of such transactions since 6.48 million homes sold in the last gasp of the housing boom.

Still, the housing market hit some tough sledding in December as both new and existing home sales suffered. Interest rates peaked at two-year highs and inventories reached a new low in NAR’s records that date back to 1998. Sales for the month were at a seasonally adjusted annual rate of 5.49 million units, down by 2.8% from November, and exceeding by a bare 0.7% the November 2015 rate.

The number of existing homes for sale ended the month at 1.65 million, an estimated 3.6-month supply at the current rate of sale and a decline of nearly 11% from listings in November. NAR has said in the past that a six-month inventory is a good balance between supply and demand.

New home sales followed a similar pattern–a good year overall, a pretty bad December. The Census Bureau said there were 563,000 newly constructed single-family homes sold in 2016 compared to 501,000 in 2015. But, for the month sales were down 10.4% from November. The seasonally adjusted annual rate was 536,000, well below even the lowest forecast and off by 0.4% from the previous December. At least the inventory was relatively healthy–at 5.8 months it was the biggest of the year.

The Federal Housing Finance Agency (FHFA) which reports on home prices based on mortgages sold to or guaranteed by Freddie or Fannie posted another aggressive report on home price gains. The agency says prices rose 6.1% from November 2015 to November 2016 and 0.5% on a monthly basis. This is the fourth month in a row that the year-over-year gain for that index has exceeded 6.0%.

But maybe, as economists have been predicting for months, the price juggernaut is slowing down. NAR reports prices one month in advance of the other major data sources and said this week there was only a 4.0% annual increase in December compared to 6.8% for the 12-month period ended in November. That is more than a slowdown; in statistical terms, it is more like slamming on the brakes.

Another notable item for the week. The Mortgage Bankers Association said the number of applications for purchase mortgages last week was the highest since June which bodes well for the coming year.

Posted on January 27, 2017 at 11:49 pm
Greg Timms | Posted in Economical Updates, Real Estate News | Tagged fannie mae, freddie mac, mortgage, news, real estate, real estate update, san diego

JUST SOLD! 18724 Caminito Pasadero, San Diego 92128

Just Sold this gorgeous 3 bedroom model with loft office/study. Ideal location with privacy & garden views.

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Posted on January 23, 2017 at 6:07 pm
Greg Timms | Posted in Real Estate Activity, Real Estate News | Tagged just sold, real estate, real estate update, san diego, san diego home sales, san diego real estate, single family residence

Getting a Jump

Housing news this week was dominated by construction reports. Well, maybe dominated is too strong a word–there wasn’t much competition.

A burst of enthusiasm on the part of homebuilders last month had carried the National Association of Homebuilders (NAHB) Housing Market Index to a 12-year high. NAHB said builder confidence moderated a bit this month; its members took back a third of last month’s 6-point gain.

Residential construction figures for December, issued by the Census Bureau on Thursday, reflect some of the builders’ shakiness, and the housing start numbers continue what Econoday calls “their wild ride of volatility.” They were down some 18% in November on the heels of a huge October gain then rose significantly in the new report. The headline number, an 11.3% gain, isn’t as good as it looks. The December increase was entirely in the multi-family sector–starts there shot up by nearly 54%–while single-family starts actually dropped.

Lawrence Yun, National Association of Realtors’ chief economist said the data was good news, but continued, “As evidenced by the brisk pace of rent and home-price growth, the country desperately needs more housing units. Aside from providing consumers with more choices, the increased construction also brings the added benefit of boosting economic growth and job creation. Ideally, housing starts should be in the range of 1.5 to 1.6 million.”

We remain a long way from that. December starts were at an annual rate of 1.23 million units, only 795,000 of which were single-family homes.

Construction permitting slipped 0.2% from November, but looked a little better for single-family building–those permits were up 4.7%. There were 1,186,900 permits issued over the entire year.

In the mood to sell? Realtor Magazine says despite the conventional wisdom about the spring market, listing early this year might bring better overall results. Agents are noting much heavier buyer demand than is usual off-season, probably triggered by rising rates. Forecasts for the new year point to an expanding economy and even more demand. With inventories continuing at record lows, sellers who list now won’t have a lot of competition.

But the real payoff of getting your home sold ASAP comes if, like most people, you plan to buy again. You can jump into the market ahead of other move-up buyers who have not yet sold–and lock in today’s interest rates for good measure.

And speaking of rates, they dropped again, down another 3 basis points for a total decline of 23 basis points since New Year’s Eve. The spring market is looking to be a great one.

Posted on January 20, 2017 at 6:02 pm
Greg Timms | Posted in Economical Updates, Real Estate News |

More Than Half-Full

Two pieces of news dominated an otherwise slow week. Taking them in order of appearance, last Friday brought a very encouraging Employment Situation Report. Job creation in December was good, if not spectacular at 156,000 new non-farm jobs. There were also revisions to the October and November reports that added a total of 19,000 jobs over the two months bringing those months to 204,000 and 135,000 new jobs respectively. What made people sit up and take notice however was an 0.4% uptick in average hourly earnings–the second healthy gain in the last three months and pushing the year-over-year increase to 2.9%.

Glass half-empty types will instantly understand that every such gain makes the Federal Reserve’s projection of three rate increases in 2017 more likely. Half-full observers know it means more people can buy houses.

We think the glass was filled by the second bit of news. The cost of buying came down a notch.

Department of Housing and Urban Development (HUD) Secretary, Julian Castro, announced a reduction in the FHA annual insurance premium, effective for loans closing or being funded on or after the 27th of this month. FHA’s insurance fund neared insolvency during the housing crisis and to rebuild it both the upfront and annual premiums were raised several times. The annual premium ratcheted up 150 percent. The announced reduction for most loans will be 25 basis points (bps).

Castro says the reduction will save the average FHA borrower $500 this year, and returns the annual premium almost back to pre-crash levels. The annual premium was reduced by 50 bps almost two years to the date of this newest cut.

That wasn’t the only notch taken out of housing costs this week, but the second might only apply to those who act fast. Freddie Mac announced a second consecutive decline in interest rates. As we said last week, one drop in rates does not a trend make, and neither does a second one. Still, rates that ended the year at 4.32% are now down 20 basis points. It is interesting that so far rates are following the same pattern they did last year, peaking at the year’s high in the last weeks of 2015 and starting what that time turned into a long-term decline the first week of 2016. We aren’t predicting or even optimistic about a repeat, but wouldn’t it be nice.

Posted on January 13, 2017 at 6:43 pm
Greg Timms | Posted in Economical Updates, Real Estate News | Tagged fannie mae, freddic mac, mortgage, real estate, update

SOLD IN 7 DAYS! 8228 Station Village Ln 1512, San Diego 92108

Greg Timms Blog | 8228 Station Village Ln 1512

Gorgeous 3rd floor corner unit with views. Freshly painted interior including baseboards & crown molding. New upgraded carpeting throughout. Private patio balcony off living room.

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Greg Timms Blog | 8228 Station Village Ln 1512

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Posted on December 16, 2016 at 9:58 pm
Greg Timms | Posted in Real Estate Activity, Real Estate News | Tagged just closed, just sold, news, real estate, real estate update, san diego home sales, san diego real estate, townhouse

Demand for Higher Loan Limits

The Employment Situation report for October was a solid one again, with 161,000 new jobs, less than analysts’ consensus of 178, but in the mid-range of their estimates. The unemployment rate fell 0.1% to 4.9%, which Econoday says some consider full employment. Probably the sweetest data nugget however was average hourly earnings. They rose “an outsized” 0.4% bringing the year-over-year rate to 2.8%, a post-recovery peak.

Conforming loan limits, the maximum size of a mortgage that can be sold to or guaranteed by Fannie Mae and Freddie Mac, (and used by the VA and FHA as well) are adjusted annually but they have not budged since 2006. The limit was at $417,000 for most of the nation, although 294 “high cost” counties had limits as high as $721,050. Then the housing market crashed and Congress passed emergency legislation preventing any upward adjustment until national home prices returned to pre-crisis levels. Since prices are a hairsbreadth away from that goal, chatter about raising the limits has begun.

Black Knight Financial Services analyzed all loans originated just below and above the limit over the last year, looking at them in $1,000 “buckets” They found a pretty consistent number of originations in 15 of the 16 buckets just under the limit. In the 16th, the $416-$417,000 bucket, there is a 17-fold increase; 100,000 loans in that tiny little pail; 1.5% of all loans originated and 2,5% of the dollar volume. In the very next bucket, the one labeled $417,001, originations plummeted by 70%. This means, Black Knight explains, that many people are bringing money to the closing table or using “piggy-back” mortgages to fit under the limit.

They also found that “piggy-back,” originations skyrocket right at the cusp of the loan limit. Loans in that final bucket are nine times more likely to have a second than other loans and one quarter of the total have one.

The take-away, Black Knight says, is a strong demand for a higher limit. The company estimates raising it by $10K would result in a 1% increase in lending– 40,000 more loans next year–$20 billion worth. There is a congressionally mandated formula for adjusting loan limits and this is the season. The Federal Housing Finance Agency should be unpacking their slide-rules soon.

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Posted on November 11, 2016 at 10:22 pm
Greg Timms | Posted in Economical Updates, Real Estate News | Tagged freddie mac, mortgage, news, real estate, real estate update

The Trump effect. How will it impact the US economy and housing?

The American people have spoken and they have elected Donald J. Trump as the 45^th president of the United States. Change was clearly demanded, and change is what we will have.

The election was a shock for many, especially on the West Coast where we have not been overly affected by the long-term loss in US manufacturing or stagnant wage growth of the past decade. But the votes are in and a new era is ahead of us. So, what does this mean for the housing market?

First and foremost I would say that we should all take a deep breath. In a similar fashion to the UK’s “Brexit”, there will be a “whiplash” effect, as was seen in overnight trading across the globe. However, at least in the US, equity markets have calmed as they start to take a closer look at what a Trump presidency will mean.

On a macro level, I would start by stating that political rhetoric and hyperbole do not necessarily translate into policy. That is the most important message that I want to get across. I consider it highly unlikely that many of the statements regarding trade protectionism will actually go into effect. It will be very important for President Trump to tone down his platform on renegotiating trade agreements and imposing tariffs on China. I also deem it highly unlikely that a 1,000-mile wall will actually get built.

It is crucial that some of the more inflammatory statements that President-Elect Trump has made be toned down or markets will react negatively. However, what is of greater concern to me is that neither candidate really approached questions regarding housing with any granularity. There was little-to-no-discussion regarding housing finance reform, so I will be watching this topic very closely over the coming months.

As far as the housing market is concerned, it is really too early to make any definitive comment. That said, Trump ran on a platform of deregulation and this could actually bode well for real estate. It might allow banks the freedom to lend more, which in turn, could further energize the market as more buyers may qualify for home loans.

Concerns over rising interest rates may also be overstated. As history tells us, during times of uncertainty we tend to put more money into bonds. If this holds true, then we may see a longer-than-expected period of below-average rates. Today’s uptick in bond yields is likely just temporary.

Proposed infrastructure spending could boost employment and wages, which again, would be a positive for housing markets. Furthermore, easing land use regulations has the potential to begin addressing the problem of housing affordability across many of our nation’s housing markets – specifically on the West Coast.

Economies do not like uncertainty. In the near-term we may see a temporary lull in the US economy, as well as the housing market, as we analyze what a Trump presidency really means. But at the present time, I do not see any substantive cause for panic in the housing sector.

We are a resilient nation, and as long as we continue to have checks-and balances, I have confidence that we will endure any period of uncertainty and come out stronger.

Posted on November 10, 2016 at 6:21 pm
Greg Timms | Posted in Economical Updates, Real Estate News | Tagged election, news, real estate, real estate update, san diego home sales, san diego real estate

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Posted on October 5, 2016 at 4:36 pm
Greg Timms | Posted in Real Estate News | Tagged just closed, news, poway, real estate, real estate update, san diego home sales, san diego real estate

On The Brink

Blizzard of Good News

Tough Sledding

JUST SOLD! 18724 Caminito Pasadero, San Diego 92128

Getting a Jump

More Than Half-Full

SOLD IN 7 DAYS! 8228 Station Village Ln 1512, San Diego 92108

Demand for Higher Loan Limits

The Trump effect. How will it impact the US economy and housing?

JUST SOLD! 17738 Villamoura Drive, Poway 92064

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