The October National Housing Survey is in, and the outlook is good. Overall, it would seem that we are seeing a continuation in the trends that have been marking an improving economy throughout the past months. Between improving mortgage conditions and personal economic situations, it would seem that it is finally a good time to sell.
The percentage of survey respondents who expected home prices to go up in the coming year dropped to forty-four, down one point from the previous month. The percent who expect home prices to go up also dropped one point to seven percent. It would seem that we can probably expect prices to remain more or less the same for a while.
As far as mortgage rate projections go, respondents who expect them to go up jumped from forty-five percent to forty-eight percent, while those who expect them to stay the same dropped from forty-five to thirty-eight.
A big factor that’s going to be tipping the market in favor of sellers is going to be the improving economic situation for potential buyers. An increasing number of people expect their personal financial situations to improve over the coming year, which means more people looking to move up. This all adds up to favorable conditions for home sellers.
The financial crisis was marked by a surplus of foreclosure properties. This serves to drag down home prices and mortgage rates as lenders and sellers desperately compete with a flooded marketplace. However, the past year has shown a distinct improvement: the last twelve months has given us the lowest level of foreclosures since November of 2007.
As of last August, there were 629,000 foreclosure properties on the market, representing a drop of 2.6 percent from July and 32.8 percent from August of last year. This makes August the 34th consecutive month that the number of homes in some state of foreclosure has dropped. If this trend continues, it is entirely possible that the national inventory of foreclosure properties could fall below 500,000 before the end of the year.
Twenty-seven states enjoyed a foreclosure rate of one percent or less as of August. Unfortunately, the market here in Washington has not yet reached this point. With a foreclosure rate of 1.5 percent, Washington sit roughly in the mid range for the nation. We therefore look forward to greater improvement going into 2015.
This Monday, Ginnie Mae kicked off their second annual Ginnie Mae Summit in Washington wherein the mortgage giant shall be describing its position vis a vis the current issues within the mortgage world. With the housing industry in a state of change, the company shall be exploring how mortgage loans and the position of lenders shall be transformed as we emerge fully from the financial crisis.
In a keynote speech from Julian Castro, the new Secretary of Housing and Urban Development, the housing industry was called upon to create a stronger market to serve the American people. “We need to work together to see a robust, healthy housing market, where those who are ready can buy a home,” said Castro. “Our nation is making progress across the board, and HUD is focused on ensuring these opportunities reach every American.”
To this end, Ginnie Mae has announced the following:
The company’s net worth and liquidity requirements are undergoing final changes, to be announced at the Mortgage Bankers Association Annual Convention next month.
The company’s acknowledgement agreement is being changed to achieve a balance in the needs of mortgage lenders and Ginnie Mae’s risk management. The company hopes that this will expand liquidity.
The company has decided upon a Dormant Issuer Policy, which would require issuers to be more active. The purpose of this policy is to allow Ginnie Mae to make more efficient use of the resources that go into monitoring the activities of issuers.
In conjunction with the Federal Home Loan Bank of Chicago, Ginnie Mae is initiating a program which would give small financial institutions greater access to the secondary market. Ginnie Mae will thereby be guaranteeing securities issued by FHLBC, beginning in November of this year.
Rates in the mortgage loan market remained steady today. Current rates put the market on par with the very best performance for September so far. For the past eleven days, rates either remained the same or climbed higher. However, we are likely to see some volatility in the near future.
The recent upward trend is likely based on anxieties stemming from the upcoming Fed announcement, where it is expected that Federal policy will be changed in favor of an early rate hike. When such an event occurs, bond markets have a tendency to weaken, which in turn causes mortgage rates to rise.
Despite this, bond markets were actually stronger today. However, it was not enough to allow for significant improvement in mortgage lender’s sheets. Some lenders improved and some grew weaker, with an overall effect of “unchanged” over last Friday.