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Luxury Home Sales Remain Strong in Seattle

With all of the changes taking place in the real estate market, one might think that buyers would be increasingly less inclined to spring for luxury homes. However, despite rising prices and shifts in buyer attitudes, the sales of homes above $1 million have remained strong in Seattle and throughout the country.

This is according to a report from Redfin, which demonstrates that luxury home sales were up by nine percent in the third quarter of 2014, despite the 1.2 percent drop in home sales as a whole, compared to the third quarter of 2013. The market for such homes has been particularly strong in Seattle, which came in at number eight on Redfin’s list of top cities for luxury home sales.

Some cities, particularly those which were most attractive to foreign real estate investors, were not as lucky. It would seem that overseas investment in luxury homes is beginning to wane. Fortunately, it would seem that domestic buyers are currently up to the task of making up the difference for much of the nation.

Could Obama’s Immigration Plan Stimulate the Housing Market?

Immigration reform has been a big deal for the Obama administration recently, with ambitious new legislation being put into place to protect many undocumented immigrants from deportation. Though there remains some controversy around the president’s plan, the housing industry could likely look forward to a healthy and robust future if Obama gets his way.

The fact is that Hispanics, which represent the greatest portion of the immigrants who can look forward to benefit from the new legislation, also represent a significant part of the housing market’s future. At present, one out of every four Millennials is of Hispanic origin. As the largely white Boomer generation settles into their permanent homes, it is this younger and larger generation that is going to be driving most new home purchases throughout the coming years.

Meanwhile, statistics show that Hispanics are trending towards homeownership more rapidly than other racial groups. Hispanics are expected to be the driving force behind 180,000 to 220,000 new homeowners every year up to 2020, and then even more into the following decade. This could account for over 55.5 percent of new homeowners through the end of this decade.

It is therefore that a revamped immigration system designed to accommodate reasonable and hard-working immigrants could very well translate into a significant boon for the country as a whole. By allowing more incoming Hispanics to qualify for mortgage loans and achieve their dreams of homeownership, we can look forward to a thriving real estate market well into the future.

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MMIF Returns to Solvency

As the economy continues to improve, more good news is coming into the housing market. Though forecasts as recent as 2012 were grim for the future of the Federal Housing Administration’s Mutual Mortgage Insurance Fund, HUD recently announced that the MMIF has returned to solvency a full three years ahead of schedule. As of Monday, it was reported that the Fund was up nearly $6 billion dollars in value from the same time last year. Meanwhile, its capital ratio jumped from negative .11% to a positive .41%.

HUD is attributing this impressive growth to the aggressive policy actions put into place over the past five years. Since the onset of the financial crisis, the FHA introduced tougher standards for their underwriting, recovery strategies, loss mitigation policies, and insurance premiums. This has resulted in a drop of delinquency rates in the agency’s portfolio of 14%, and a 16% improvement in recovery rates over the previous year.

Going forward, the FHA hopes to maintain this strong trend and continue to be a valuable asset to the housing market. To do so, the agency plans to continue improving transparency and certainty in regards to their loans. Meanwhile, with mortgage insurance premiums at an all-time high, the FHA hopes to find a way to achieve a proper balance that will maintain their sustainability while simultaneously serving the borrowing public.

Mortgage Rates Hold Going Into Labor Day Weekend

Going into Labor Day weekend, mortgage rates remained more or less unchanged. While some mortgage lenders saw some increases and some saw some decreases, a majority showed a negligible difference, or no difference at all.

The lack of improvement this past week is notable, as recent activity in the underlying markets that most strongly affect mortgage rates should be driving improvement. Not only are mortgage-backed securities in good shape, but the European markets are also serving to bring US rates lower than they might otherwise be.

In part, this can be attributed to the three-day weekend. Such events, particularly when they come at the end of a month, have historically hampered improvement in the market. For a lender, it is risky to make commitments ahead of a long weekend. This is all the more true during times of geopolitical uncertainty. We may therefore expect more activity in the coming weeks, and look forward to some potential improvement.

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Rises in Home Prices Slowing Down

Recovery in the real estate market has been marked with increased home prices and mortgage rates. June was no exception to this trend, but the news is not all bad; according to the Home Price Index released by Black Knight Financial Services, the rate of price growth has been gradually dropping.

Month-over-month price changes have varied, with December of 2013 seeing price increases of 0.1 percent and February hitting 0.7 percent. However, the annual rate of increase has been moderating steadily throughout the country. While home prices in September of 2013 were up 9 percent over the previous year the year-over-year price increase seen last month was only 5.5 percent. The year-to-date increase has been at 4.3 percent. Nationally, prices are currently 10.4 percent below June of 2006’s peak of $268,000.

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Another Drop in Delinquency Brings Us to 2007 Levels

The Mortgage Bankers Association as some good news in terms of mortgage delinquency. In the second quarter of 2014 the delinquency rate for one-to-four unit residential mortgages dropped. This represents the fifth quarter in a row that we’ve seen such a drop. This put the seasonally adjusted rate of such loans outstanding at 6.04 percent, which is the lowest rate since the fourth quarter of 2007.

Mortgages in serious delinquency, or loans that are either ninety or more days past due or in foreclosure proceedings, comprised 4.8 percent of total mortgages. This is twenty-four basis points lower than the previous quarter, and one hundred eight basis points below the second quarter of 2013.

Mortgage loans that were in foreclosure proceedings in the second quarter comprised 2.49 percent of all mortgages. This represents a drop of sixteen basis points from the previous quarter, and eighty-four basis points from the same time last year. This brings us to the lowest foreclosure inventory rate since the beginning of 2008, and even states hit hardest by the crisis are enjoying pre-crisis levels of foreclosure inventory.

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Apartment Construction Leads the Way

It’s no mystery that the construction market is closely linked to the mortgage market. Around the Lynnwood area, a low inventory of homes and increased mortgage rates are inspiring many developers to get busy with new developments. And, while we are seeing a significant increase in single family homes, it would seem that multi-family rental spaces are taking the helm in housing recovery.

With the recovering economy and the increase of job availability, a greater number of young people are finally able to move out of their parents’ houses and get a place of their own. This is a population that is eager to be on their own, but reluctant to settle down yet or take on the financial burden of a mortgage. For this reason, the Millennial population has been fueling a greater demand for affordable rental spaces.

Regions struck hardest by this demand for apartments have been places like Seattle, New York, Boston, and San Francisco. Such markets are on their ways towards building upwards of fifty percent more new homes in 2014, according to a study of building permits.

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