Did The Media Cost Homeowners $16,500 Last Year?

Courtesy of Barry Habib @ MBSHighway...Stocks are Higher and Mortgage Bonds are lower after some strong Housing News this morning. Earlier today, the MBA (Mortgage Bankers Association) reported that Mortgage Applications increased by 2.3% from the previous week.  Purchase Applications gained 5% and are at their best levels in almost 2 years.  Purchases have moved higher 4 out of the 5 weeks and are 16% higher than this time this year.  Refinances increased by 1%, with the share of Refinances decreasing to 56% of total application to the lowest level in 6 months, due to the surge in purchases.

In housing news, the FHFA House Price index was reported up 0.7% for February.  On a year over year basis, home prices were up 5.4%.  This was another strong housing report, right in line with our appreciation expectations.

Existing Home sales for March were reported much better than expected.  Sales were up 6.1% at a 5.19M unit pace, which was almost double expectations.  Sales were up 10.4% on a year over year basis to their best level in 18 months.  The median home price was reported at $212,100, up 7.8% year over year.  Supply was still low with 2 million homes for sale, but this was up 2%.  Even though literally every aspect of this report was positive, a reporter on CNBC (Diana Olick) tried to put a negative spin on the report.

With home prices up 7.8% year over year, a homeowner who purchased a home last year at the median home price gained roughly $16,500 in appreciation.  Viewers who watched and listened to Olick's negativity on the house market over the last year would have certainly missed out.

For those of us in the industry, make sure you're informing your clients and referral partners of the opportunity out there.  It's also important to take this news (existing sales, median home price increase, etc.) and bring it down and show how it applies to your local market.

Denver's Real Estate Bidding Wars Are Compared To The "Hunger Games"

Click Here To The Denver Post. 

Freddie Mac's New 3% Down Program

Freddie Mac announced that it is scheduled to start buying mortgages with down payments of only 3% – the first time down payments have been this low on Freddie Mac loans in nearly five years. The program is called Freddie Mac Home Advantage.   

In a recent Executive Perspectives, Dave Lowman EVP, Single-Family Business Freddie Mac, explained the potential impact this program will have on the housing market:

“There's a new reason Realtors and lenders may expect more qualified borrowers at the closing table during this spring's home buying season. In addition to low mortgage rates and rising job growth, the down payment hurdle is starting to shrink for credit-worthy borrowers, including first-time homebuyers.”

And the mortgage industry agrees with Mr. Lowman. In a recent survey of mortgage originators by the National Association of Realtors (NAR), it was revealed that most loan officers believe the move to a lower down payment will increase access to mortgage credit. Here are that survey’s findings:

Bottom Line

Many potential buyers are “ready and willing” to buy a home but have been afraid they may not be “able” because of a lack of adequate savings for a down payment. If you have any questions, we're here to help!  Give us a call at 720-200-6868.

It's Time To Spring Forward!

Top 5 Things You Can Do To Win Over Millennials

2015 has been termed as the year of Millennial Homebuyers. It’s a generation of social geeks a.k.a digital warriors and most of their decisions are based upon reputation.

If you are planning to target Millennials, do your homework.  Click HERE to find the top 5 things you need to do to successfully work these first-time buyers.

Either Way, You're Paying A Mortgage

There are some people that have not purchased a home because they are uncomfortable taking on the obligation of a mortgage. Everyone should realize that, unless you are living with your parents rent free, you are paying a mortgage - either your mortgage or your landlord’s.

As a paper from the Joint Center for Housing Studies at Harvard University explains:

“Households must consume housing whether they own or rent. Not even accounting for more favorable tax treatment of owning, homeowners pay debt service to pay down their own principal while households that rent pay down the principal of a landlord plus a rate of return. That’s yet another reason owning often does—as Americans intuit—end up making more financial sense than renting.”

Also, if you purchase with a 30-year fixed rate mortgage, your ‘housing expense’ is locked in over the thirty years for the most part. If you rent, the one guarantee you will have is that your rent will increase over that same thirty year time period.

As an owner, the mortgage payment is a ‘forced savings’ which will allow you to have equity in your home you can tap into later in your life. As a renter, you guarantee the landlord is the person with that equity.

Bottom Line

Whether you are looking for a primary residence for the first time or are considering a vacation home on the shore, owning might make more sense than renting since home values and interest rates are still lower than projected.