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Lack of Distressed Properties Brings Real Estate Sales Down

Mortgage loan officers in Lynnwood and across the country have been noticing a trend in declining home sales lately. In February, thirty-one states experienced a decrease in home sales over January, and six states saw a drop from the same time last year. Nationwide, the median sales price for residential properties was $164,667 in February, which represents a decline of one percent from January.

A big part of this trend appears to be related to the dwindling inventory of distressed homes. With many foreclosed properties going on the market over the past years, the housing market had come to depend upon this inventory. However, as demand increases and fewer houses are going into foreclosure, these homes are rapidly drying up. Meanwhile, this dearth of homes is not being adequately compensated for in non-distressed sales or new construction.

Distressed properties still represent a significant part of real estate sales, though. In February, 5.7 percent of sales were short sales and an additional 11.2 percent represented sales of homes owned by banks. This makes for a combined percentage of distressed sales of 16.9 percent, which represents an increase from January’s 16.1 percent but a decline from the 19.1 percent we saw in February of last year.

Source: https://www.mortgagenewsdaily.com/03272014_realtytrac_home_sales.asp

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.

Source

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.

Mortgage Rates Await Thursday’s Fed Announcement

Going into the third week of September, mortgage rates appear to be doing nothing but waiting for Thursday’s FOMC Announcement. Indeed, the entire bond market is holding its breath to see what the Fed decides upon.

Should the Fed announce a rate hike, it would not necessarily be a negative force for mortgage rates. It is largely the uncertainty leading up to this decision that is having the most effect on our current rates. Indeed, the absence of volatility in the market for a while now can likely be attributed to this uncertainty, as investors are on hold in anticipation of a decision.

Once the announcement is made, regardless of what it turns out to be, we can likely expect some dramatic activity. One way or another, rates could either rally or sell off. Many people trying to decide whether to lock or float would probably be wise to secure the reasonably low rates that are currently available, while only those who are sure they can afford to be wrong should take the chance of floating. Further, as we cannot necessarily expect that this lack of volatility will persist right up to Thursday, sooner is better than later.

Existing Home Sales Dip in August

Looking back at August, we can see that sales of existing homes dipped 4.8% from July’s 5.58 million units to a seasonally adjusted annual rate of about 5.31 million units, despite low prices and reasonable mortgage rates. This decline is cutting off three consecutive months of increases.

However, the news is not all bad. Though August was down from July, it represents a year-over-year increase of 6.2%. This is the eleventh consecutive month wherein we have seen year-over-year improvement of existing home sales.

Meanwhile, prices continue to go up. The median price for existing homes was $228,700 in August, which comes to an increase of 4.7% over the $218,400 we saw in August of 2014. This is the 42nd consecutive year-over-year gain in existing home prices.

Though inventory continues to be a big problem, August showed an increase of 1.3% to 2.29 million homes. This comes out to a 5.2 month supply, compared to the 4.9 month supply in July. However, this inventory is 1.7% lower than what was experienced in August of 2014.

Mortgage Rates Down as Bonds Thrive

Mortgage rates are poised to end September on a strong note. Entering the final week, rates moved close to recent lows experienced in the previous week. We can likely expect many borrowers to see these same rates through Friday, enjoying noticeable gains in the form of low closing costs and high lender credit. All in all, it’s one of the best days we have seen since early May.

This strong activity can be attributed to broad economic weakness. Fears among investors are driving stocks downward, which is generally good news for the mortgage market. The Federal Reserve’s decision to keep interest rates near zero has not provided investors with the certainty they need to pour money into riskier assets, so money has been moving out of stocks and into bonds, causing prices to go up and rates to go down.

Anybody planning to close on a loan within the coming thirty days may be well advised to lock in to current rates. Contact us to talk to a Lynnwood mortgage broker right away.

What is Your Credit Score?

There are a lot of scams out there these days, none that we find as frustrating though as the infamous online credit score! Here we have one of the all-time greatest inventions to rip off the average consumer, why isn’t anybody creating a fuss about such a magnificent scam? The reason is because almost nobody understands how it all works and the powers to be keep it all very hush hush.

How many people have checked their scores online at some point? There is no great data on this but we are thinking the majority of everyone has checked their scores online. Now, out of all these millions of people, how many could use these exact scores for lending purposes? We are going to go with 0, give or take. This is due to the fact that online scoring models, even the ones provided by the bureaus themselves, are completely different from the scoring models that lenders use when a loan is being applied for. This makes the average online and the credit bureau’s scoring models completely worthless.

How is this legal you may ask? They don’t claim they are giving a FICO lending approved scores, they are saying is what “we” calculate your score to be, based on our system. Even on the rare occasion if they use a FICO model, there are over 50 of those scoring algorithms created so it’s unlikely to be the one your lender is using. Some of the online scores are so off it seems like a bad joke, like Transunion direct source who is Truecredit, their score range goes from an 501 to a 999 so you easily see yourself with an 800 or 900 but that doesn’t mean it’s worth the paper it’s printed on.

Another laughable aspect about this system is that you notice how a consumer never applies for a loan only to find out that their score is actually much higher than what they recently pulled online. In fact the average online score is roughly 40 points higher than what you see through a lender. The conspiracy theory behind this is that the better score you show someone on average, the more people you will attract to your website through referrals.

Kick your feet up – lean back, and rest assured you can be in the driver seat – when you meet with a real mortgage lender and get your true FICO mortgage score – and know all about the loan programs, options, LLPA info then you will be well informed to make the right decision.

So, What Is Your Credit Score?