Bobbing to the Surface

By now we feel the need to explain the term “underwater.” Eight years ago, virtually everyone knew its meaning, since many were experiencing it first-hand. Underwater: owing more money on a mortgage than the house is worth.
It was one of the more widespread results of the 2008 housing crash and the ensuing plunge in home prices. By the third quarter of 2009 more than a quarter of homeowners with a mortgage had lost all equity in their home. Homeowners in this position were far more likely than their neighbors to be delinquent on their mortgages and to fall into foreclosure. They were also unable to sell their homes unless they brought cash to the closing table or convinced their bank to allow a short sale, i.e. take less than was owed on the mortgage. Before government programs such as the Home Affordable Refinance Program (HARP) began, they were unable to refinance into the prevailing record low-interest rates.
In the latest of its quarterly reports on negative equity, CoreLogic says 1 million homes gained positive equity over the 12 months ending in March. While 3.1 million homes remained underwater–still a big number–that is only 6.1% of mortgaged homes; an annual decline of 24%. Homeowner equity nationwide rose by $750 billion on an annual basis.
Underwater: thankfully now a fading memory for most.
Fed Raises Interest Rates
As anticipated, the Federal Reserve’s Open Market Committee (FOMC) raised the fed funds rate for the third time in six months on Wednesday. The quarter-point hike brings the benchmark rate to 1-1.25%. One more increase is expected this year and perhaps three to four in 2018. We shall see.
Black Knight Financial Services says the first quarter of 2017 was a bad one for refinancing; originations fell 45% compared to the last quarter of 2016. However, the recent easing of rates (they remained below 4% this week), may change the outlook.
With interest rates below 4%, the number of homeowners that could benefit from refinancing has risen to the highest level so far this year, to 4.4 million, 1.6 million more than in mid-March.
The company calculates that those in the “financeable pool” could save an average of $260 each month on their mortgage payment. Roughly 2.5 million of them would save between $100 and $300 and nearly 700,000 could chalk up savings of $400 a month or more.
Are you in that pool? Call or email to find out.
Posted on June 16, 2017 at 4:53 pm
Greg Timms | Category: Economical Updates | Tagged , , , , , , ,

Prices Continue to Rise

The first March home price data shows month-over-month appreciation at the fastest pace in 11 months. The CoreLogic Home Price Index (HPI) rose 1.6% compared to February, the largest gain since last April.
After more than a decade of decline, the homeownership rate set a record low of 62.9% in the second quarter of 2016. It ticked up the next two quarters, but was down again in the first quarter of this year. It was only a 0.1% dip, but still, a disappointing break in the flow. There were, however, some pluses in the U.S. Census Bureau report.
First, the homeownership rate is still higher than a year ago. Second, the large and persistent gap in homeownership between white and minority households narrowed slightly. Both black and Hispanic homeownership rates were up by more than a percentage point year-over-year.
The Census Bureau report, which also tracks vacancies and rents, noted that Q1 marked the first time since 2006 that owner households grew faster than renter households. The former grew by 850,000 units while renter households rose by 365,000.
Rates Stay Low
The Federal Reserve Open Market Committee (FOMC) left rates alone at its May meeting. Officials signaled their belief that recent indications of decelerating growth (the 1st quarter GDP grew by a paltry 0.7%) were temporary and that they would stay with their plan for two more rate hikes this year.
The FOMC decision is always interesting, but it has little to do with mortgage rates. Over the next few years they are more likely to be impacted by a potential reversal of QE, quantitative easing. To refresh your memory, in 2009, the Fed launched QE, buying huge numbers of mortgage-backed securities (MBS), an effort to keep rates low and mortgage money flowing. The MBS issued by Fannie Mae and Freddie Mac (the GSEs) are collateralized by pools of conforming mortgages and those from Ginnie Mae by FHA/VA backed loans.
The Fed stopped investing new money several years ago, but continues to reinvest as mortgage balances are paid down or securities mature. It now holds $1.75 trillion in MBS, 30% of the total market.
Per the Urban Institute, it is a given the Fed will divest, probably soon and the path they chose is critical. Gradually cutting back on reinvestment would be the least disruptive option, or they could abruptly stop reinvesting, letting their portfolio run off through mortgage paydowns. Finally, they could sell the whole portfolio on the open market. Any of these options will reduce demand for the securities, and will probably raise rates, but the Fed’s management of the process will make a big difference. We’ll keep our eye on this.
Posted on May 5, 2017 at 5:45 pm
Greg Timms | Category: Economical Updates | Tagged , , , , , , ,

JUST LISTED! 14302 Sandhill, Poway 92064

You’ll love the private, gated courtyard entry into this Gorgeous single level home. Immaculate and meticulously maintained inside & out.

Awesome solar pool & spa with cascading water flowing into the pool.

Enjoy entertainer patio areas, large living room & family room with dual faced fireplace and built-in cabinets.

Open kitchen with granite counter tops, large center island plus breakfast area. Formal dining room.

The master suite is 20 X 16 with fireplace & walk in closets.

 

Walk to Poway High School & Lake Poway. No Mello Roos

Currently offered at $1,225,000

Please call me today if you or someone you know is interested in seeing the home.

Posted on April 28, 2017 at 9:29 pm
Greg Timms | Category: Real Estate Activity | Tagged , , , , ,

Banner Week

As weeks go, one could probably call this a banner one. Three home price indices showed home prices continuing to accelerate and two of three reports on home sales were positive (even the third wasn’t that bad). Heck, even inventories increased a bit.
New home sales appear to have finally broken free of their persistent see-saw pattern and have now risen convincingly for three straight months. Sales in March increased by 5.8% from February and were up 15.6% compared to the previous March. The bump brought the annual rate of sales to 621,000 units, nearly tying the 622,000 unit pace set in July as the highest since the housing crash. It was also the first time since then that sales exceeded 600,000.
Highest Pace in Over 10 Years
Existing home sales started 2017 with a 3.23% gain only to fall back by more than that in February. Now sales are back in the black for the year with a 4.4% jump in March. The month’s seasonally adjusted annual rate of 5.71 million sales was the highest rate since February 2007 and puts sales 5.9% above those in March 2016.
Pending home sales were down 0.8%, but the National Association of Realtors (NAR) said it was still the third best month for purchase contracts in a year. Analysts had expected the pull-back after a 5.5% increase in February and given the way sales have yo-yo’d month to month.
Price Appreciation Continues to Rise
Just as CoreLogic did earlier in the month, Black Knight Financial Services, S&P Case-Shiller, and the Federal Housing Finance Agency (FHFA) all posted annual increases in their respective February price indices that were larger than those in January. The year-over-year appreciation ranged from 5.7% (Black Knight) to 6.4% in Case-Shiller’s National Index. The latter was 0.7% higher than Case-Shiller’s January number.
Higher prices are, of course, terrific news if you already own a house, but maybe this news is hopeful for prospective buyers as well. Increasing equity may allow, or incentivize some homeowners to sell. There is already a little movement; the inventory of existing homes increased 5.8% to 1.83 million in March, although that is still far below last year’s already tight supply. The number of new homes available for sale gained, by slightly more than 1%. Rising sales however, will put those inventories under increased pressure.

Fannie Mae announced some changes to underwriting to help those with student loan burdens more easily qualify for a mortgage. There are options for both buyers and refinancers, so check in and see how they might apply to your situation.

Posted on April 28, 2017 at 5:53 pm
Greg Timms | Category: Economical Updates, Real Estate Activity | Tagged , , , , ,

And The Survey Says

Bloomberg put part of the blame on the Nor’easter that tore up the East Coast last month, but last Friday’s Employment Situation Report from the Labor Department was the worst since last May. There were 98,000 jobs created during March, while analysts polled by Econoday were looking for 125,000 to 202,000. Further, the number of jobs created in February was revised down from 235,000 to 219,000.
The report’s bright spot was a sharp drop in the unemployment rate which fell by 0.2% to 4.5%, the lowest rate since the high point of the last expansion, April 2007.
Spring seems to be the season for surveys. Freddie Mac asked renters about their housing situation and found more than half saying renting is good for them, up 4 percentage points since the September survey. Millennials seem more content with their status than their older counterparts; 73% said they would rent when they next moved, up from 64%, and well above the 59% of all renters who expressed that choice.
Renters increasingly prefer single-family houses. The aggregate of those who want to move into an apartment complex, either small or large, fell by 7 percentage points while preference for a home or condo rose by 5 points.
Sales of both new and existing homes set records last year, but a survey by the National Association of Realtors (NAR) found vacation home sales had plummeted. Sales to owner-occupants rose from 3.74 million in 2015 to 4.21 million in 2016, accounting for 70% of the market, but vacation home purchases fell by 21.6%, from 920,000 to 721,000. Those second home purchases accounted for 12% of sales, down from 16% in 2015 and the lowest share in five years.
Individual investors (those who buy less than 10 properties in a year) picked up some of the slack. Their purchases increased by 4.25% to 1.14 million. Both investors and vacation homebuyers showed a greater inclination to rent out their homes short-term (less than 30 days) and both took out more mortgages than in the past. All-cash sales to investors and vacation homebuyers declined by 4 and 10 percentage points respectively.
NAR Chief Economist Lawrence Yun speculated that the decline in vacation home sales was only temporary, due in part to rising home prices, but also to the volatility in the financial markets in late 2015 and early 2016. “Some affluent households with money in stocks likely refrained from buying or delayed plans until after the election,” he said.

It is “Spring Market Time” and mortgage rates are cooperating. They have now declined for four straight weeks, putting the 30-year fixed-rate right back where it was during the week ending December 1st.

Posted on April 14, 2017 at 6:57 pm
Greg Timms | Category: Economical Updates | Tagged , , , , ,

Brightening Prospects

The Pending Home Sales Index (PHSI) has been making economists queasy since last fall. The index, based on signed contracts for home purchases, is a leading indicator of existing home sales over the following one or two months. For the last three months, it has wobbled between negative numbers and lackluster ones. A particularly bad January report cast doubt on prospects for a robust spring market.
Well, put on your tip-toe-through-the-tulips shoes. The National Association of Realtors says that pending sales jumped by 5.5% in February, more than twice the increase expected. This brought the index to 112.3, the second-highest reading (trailing only April 2016) in 11 years. The surge was broad based; every region saw an increase, ranging from 3.1% in the West to 11.4% in the Midwest.
We reported earlier this month that home price reports from both CoreLogic and the Federal Housing Finance Agency indicate that the price increases are no longer accelerating and in fact may be losing steam. This week Black Knight Financial Services reinforced that notion; its Home Price Index rose 5.4% for the 12 months ending in January, 0.3% point less than the December increase. However, the granddaddy of all price trackers, S&P Case-Shiller, put a big lid on that theory.
Largest Gain in Thirty-One Years
Case-Shiller’s National Index for January showed a year-over-year increase of 5.9%. This was not only a bigger gain than December’s (5.8%) but was the largest in 31 months. Both the Case-Shiller 10-City and 20-City Composites posted even larger annual gains from December than the National Index and 12 of the 20 metropolitan areas in the index saw prices rise faster in January than December.
Interest rates are back in the news this week–and on two different fronts. Even though the Federal Reserve’s Open Market Committee (FOMC) announced, as it raised the fed funds rate on March 16, that they would probably do it two more times this year, three members of the of the Board of Governors said this week that, maybe they really meant three more times.

We are often reminded that the fed rate is a short-term one, and doesn’t necessarily affect long-term rates like mortgages. Sure didn’t this time. The day after the last rate hike Freddie Mac’s 30-year rate averaged 4.30%. Since then it has dropped 16 basis points, nine of them this week alone.

Posted on March 31, 2017 at 6:37 pm
Greg Timms | Category: Economical Updates | Tagged , , , ,

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.

Posted on March 17, 2017 at 5:10 pm
Greg Timms | Category: Economical Updates, Real Estate News | Tagged , , , , , ,

JUST SOLD! 18724 Caminito Pasadero, San Diego 92128

160057063

Greg Timms Blog | 8724 Caminito Pasadero

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

Greg Timms Blog | 8724 Caminito Pasadero

Greg Timms Blog | 8724 Caminito Pasadero

Greg Timms Blog | 8724 Caminito Pasadero

Greg Timms Blog | 8724 Caminito Pasadero

Greg Timms Blog | 8724 Caminito Pasadero

Greg Timms Blog | 8724 Caminito Pasadero

Open kitchen with granite counter center island off family room with fireplace & lots of kitchen cabinets. Spacious living room with dining adjacent to it.

Greg Timms Blog | 8724 Caminito Pasadero

Greg Timms Blog | 8724 Caminito Pasadero

Greg Timms Blog | 8724 Caminito Pasadero

Greg Timms Blog | 8724 Caminito Pasadero

Spacious master suite with walk-in closet, dual vanity & views.

Greg Timms Blog | 8724 Caminito Pasadero

Greg Timms Blog | 8724 Caminito Pasadero

Greg Timms Blog | 8724 Caminito Pasadero

Greg Timms Blog | 8724 Caminito Pasadero

Greg Timms Blog | 8724 Caminito Pasadero

Greg Timms Blog | 8724 Caminito Pasadero

Greg Timms Blog | 8724 Caminito Pasadero

Greg Timms Blog | 8724 Caminito Pasadero

Greg Timms Blog | 8724 Caminito Pasadero

Sought after gated community with multi-million dollar clubhouse with 2 pools, BBQ area, lighted tennis courts, exercise room, banquet room and more! No Mello Roos. Poway School District.

Greg Timms Blog | 8724 Caminito Pasadero

Greg Timms Blog | 8724 Caminito Pasadero

Greg Timms Blog | 8724 Caminito Pasadero

Greg Timms Blog | 8724 Caminito Pasadero

I can get the same results for you! If you are having thoughts of buying or selling (sell early in 2017) then call me now!

Posted on January 23, 2017 at 6:07 pm
Greg Timms | Category: Real Estate Activity, Real Estate News | Tagged , , , , , ,

Playing Catch-Up

The Old Year and our two-week break has left us with a lot of make-up work. While sales and pricing data dominated the usual end-of-month flood and was largely positive, the Census Bureau’s construction numbers took some of the edge off.
The two backward looking reports on home sales–new, and existing–continued to show a strong fall selling season while pending sales, a leading indicator, were a little unsettling.
New home sales, which seem to alternate good months with not-so-good ones, rose 5.2% in November, pulling out of a 1.9% slump the month before. The seasonally adjusted rate of 592,000 units was second only to June for the year-to-date and was 16.5% higher than the pace a year earlier.
Existing home sales were higher for the third straight month. Sales topped October’s by only a fraction, 0.7%, but it was good enough to make November the strongest month since February 2007.
Pending sales were the lowest since January and the 2.5% loss is discouraging vis-à-vis the sales outlook for the next few months. Lawrence Yun, chief economist for the National Association of Realtors (NAR) said the “brisk” uptick in mortgage rates during the month along with inventories that continue to be far from adequate, “dispirited some would-be buyers.”
Construction data indicates that little inventory relief for “dispirited” new home buyers is in the immediate offing. While housing completions were up strongly (15.4% from October), permitting and housing starts lost a lot of ground. Permits fell 4.7% for the month and 6.6% year-over-year. Housing starts dropped even more dramatically; they were 18.7% lower than in October and 6.9% below the November 2015 level.
All the numbers from the five home price reports issued in the last two weeks were exuberant to say the least. Three of the reports were for October and Case-Shiller, the Federal Housing Finance Agency, and Black Knight Financial Services, while not agreeing among themselves on exactly how much prices were up, posted October estimates that were very true to those in recent months; two showed even faster increases. All three put the year-over-year appreciation at 5.6 to 6.0%
If October was exuberant, two November reports were ebullient. CoreLogic upped the annual change from 6.7% in October to 7.1% in November while NAR’s year-over-year number jumped 8 basis points to 6.8%. Nary a sign of the slowdown that analysts have been predicting for months.
There was no holiday respite for Interest rates. The 30-year fixed-rate mortgage hit 4.32% during Christmas week, a 32-month high, but reversed course this week, falling 12 basis points (bps). Despite the 90 bp increase since October 1, Freddie Mac says the average rate for the entire year was 3.65%; the lowest since it started keeping records in 1971.

Don’t forget that new loan limits kicked in on January 1. The increases were not huge–conventional limits went from $417,000 to $424,100 with limits in “high cost areas” rising proportionally–but maybe up just enough to make your purchase or refi more doable.


Greg Timms Blog | FreddieMac 010617

Posted on January 6, 2017 at 5:26 pm
Greg Timms | Category: Economical Updates | Tagged , , , , , , ,

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.

Greg Timms Blog | 8228 Station Village Ln 1512

Greg Timms Blog | 8228 Station Village Ln 1512

Greg Timms Blog | 8228 Station Village Ln 1512

Greg Timms Blog | 8228 Station Village Ln 1512

Stainless steel appliances, breakfast nook, granite counters throughout kitchen & plenty of cabinets. Interior laundry room & open living room.

Greg Timms Blog | 8228 Station Village Ln 1512

Greg Timms Blog | 8228 Station Village Ln 1512

Greg Timms Blog | 8228 Station Village Ln 1512

Greg Timms Blog | 8228 Station Village Ln 1512

Spacious master bedroom & 2nd bedroom. Two full baths with tubs.

Greg Timms Blog | 8228 Station Village Ln 1512

Greg Timms Blog | 8228 Station Village Ln 1512

Greg Timms Blog | 8228 Station Village Ln 1512

Greg Timms Blog | 8228 Station Village Ln 1512

Greg Timms Blog | 8228 Station Village Ln 1512

Greg Timms Blog | 8228 Station Village Ln 1512

Greg Timms Blog | 8228 Station Village Ln 1512

Greg Timms Blog | 8228 Station Village Ln 1512

Greg Timms Blog | 8228 Station Village Ln 1512

One car garage at entry level & parking space close by. Close to pool & BBQ area.

Greg Timms Blog | 8228 Station Village Ln 1512

Greg Timms Blog | 8228 Station Village Ln 1512

Greg Timms Blog | 8228 Station Village Ln 1512

Greg Timms Blog | 8228 Station Village Ln 1512

Greg Timms Blog | 8228 Station Village Ln 1512

Greg Timms Blog | 8228 Station Village Ln 1512

Sold for all Cash at $410,000!

I can get the same results for you! If you are interested in seeing this home, please contact me today!

Posted on December 16, 2016 at 9:58 pm
Greg Timms | Category: Real Estate Activity, Real Estate News | Tagged , , , , , , ,