Remodelers' Outlook Positive, Real Estate Changes on the Horizon

CF Funding is happy to share that remodelers’ ratings of current market conditions have increased to a score of 56 in the second quarter of 2014. In the NAHB’s quarterly survey, the Remodeling Market Index (RMI) rose three points, “reclaiming the territory it had lost during what was likely a weather-related dip in the first three months of the year,” according to a blog post today by Paul Emrath. A score of 50 or higher is positive, as more than half of remodelers in the survey reported high market activity, a great indicator for future activity.

The survey measures current conditions with 3 factors: major additions/alterations, minor additions/alterations, and maintenance /repair. In Q2 2012 scores were as low as 42 in some categories, and in Q2 2014 all scores were above 53. Future market indicators such as calls for bids, amount of work committed for the next 3 months, backlog of remodeling jobs, and appointments for proposals were also all above 53. Improvement in the jobs market has impacted the RMI, as homeowners have regained equity and confidence in the housing market has increased.

In other real estate news today, Realtors may be surprised to hear that Zillow Inc. is seeking to purchase Trulia Inc., and the two rival real estate websites may combine in the near future. The two websites are used by realtors, homebuyers, and home sellers to list homes and apartments for sale or rent. The companies make money by charging realtors and homesellers a fee for advertising. In June, the sites had over 85 million visitors and acquired almost 90 percent of traffic out of the 15 most visited real estate sites. According to Bloomberg Businessweek, Zillow may pay up to 2 billion dollars to acquire its rival site, and two-thirds of the price may be paid with Zillow stock. Both companies saw a rise in stock today, with Zillow rising more than 15 percent and Trulia rising 32 percent. Trulia’s revenue is expected to increase 76 percent this year to reach 253 million dollars, and Zillow’s revenue is expected to increase about 58 percent, reaching 311 million dollars.

Rumors of the two companies merging have not been publicly confirmed by members of either company. Regardless of the outcome, CF Funding hopes to see the sites continue to support realtors, FSBOs, and homebuyers as they buy and sell properties. Realtors and other home sellers who need assistance using these online tools to list properties may contact CF Funding today by calling 630-328-8905.

Warm Weather Brings Out Homebuyers

According to the Mortgage Bankers Association, purchase applications have risen 3 percent last week in comparison to the previous week on a seasonally adjusted basis. CF Funding is happy to see applications rise as the weather has improved, allowing for more homebuyers to shop around and meet with lending specialists.  The increase was mainly seen in conventional loans, which saw a 4.0 percent increase in purchase applications.

Unfortunately, home purchase applications are still down 17 percent on an unadjusted basis from one year ago. Overall mortgage application activity saw a 3.5 percent decrease from one week earlier. According to CNBC, “some [are] still blaming the weak home sales market on rough weather in much of the nation” and “All-cash buyers continue to represent an outsized share of the housing market at over one- third of all sales.”

Refinances have seen a drop as interest rates rise, with an 8 percent decrease last week in comparison to the previous week. Refinances currently cover about 54 percent of mortgage activity, which is down about 68% from last year (when interest rates were lower).  This is the lowest amount seen since April 2010. Experts predict that refinances will continue to decrease in 2014 as rates continue to rise. According to the MBA, an increase in purchases will make up for some of this loss, but will not completely level out the decrease. There are many homeowners who could still benefit from a refinance this year before rates rise, and CF Funding loan specialists can offer a free consultation for those considering a refinance.

Average contract interest rates for a 30-year fixed mortgage with loan balances $417,000 or less were at 4.56 percent (highest since January), an increase from the previous week’s 4.5 percent.  Average contract interest rates for a 30-year with jumbo loan balances were at 4.45, an increase from the previous week’s 4.39 percent. Adjustable-rate mortgages saw no change last week, covering 8 percent of total applications.

Although interest rate increases may be discouraging to some homebuyers, CF Funding urges readers to stay optimistic, as a rise in rates is a sign of economic improvement, and allows homeowners to gain positive equity in their homes. CF Funding hopes to see a continued increase in purchase applications as the weather continues to improve. Those who are considering buying a home and would like to compare loan options from multiple lenders should contact a CF Funding loan specialist today by visiting www.cffunding.com or calling (630)328-8900.