Home Prices at Peak, Gains Expected to Slow in 2014

CF Funding is pleased to share with homebuyers that home prices in the U.S. are at their peak, according to property analysts, and further increases are expected to be more subtle. Many homeowners have benefited from rising home prices in recent years, as they were able to regain the equity in their homes, allowing them to refinance or remodel. However, many counties have reached new home price peaks over the past few years, some now higher than pre-recession levels. A few counties that have reached price peaks include San Francisco County, CA, Travis County, TX, and Jefferson County, CO, as mentioned in a Reuters Press Release on Thursday.

Median home prices are up 11 percent from a year ago, and are now at their highest level since December 2008. On Wednesday, CF Funding shared that “Home price gains were high in Chicago, with a year-over-year gain of 11.5 percent. Price gains were also high in Cleveland, Detroit, Miami, Minneapolis, and New York.” Luckily for homebuyers, interest rates remain lower than expected as the Federal Reserve plans to keep interest rates below historic averages for awhile.

 The median sales price of residential properties in the U.S. reached $172,000 in April, which is the largest year-over-year increase “since median prices bottomed out in March 2012,” according to Realty Trac. Vice President Daren Blomquist said median home prices are still 28 percent lower than pre-recession peaks of $237,537, seen in August 2006. However, “There are a surprising number of markets… where median home prices have surpassed their previous peaks since the Great Recession ended in June 2009.” This “surprising number” of markets is about 19 percent of major counties in the U.S. CF Funding is happy to see homeowners regaining equity across the country.

Some markets have seen home prices slow down over the past year, such as Phoenix, AZ, which had a 9 percent home price appreciation in April 2014 versus a 30 percent annual appreciation in April 2013. Tampa, FL saw a 5 percent appreciation over the past year versus a 19 percent annual appreciation in April 2013. Jacksonville, FL had only 4 percent appreciation in April 2014 versus a 17 percent appreciation in April 2013. This is a clear sign of a slowdown in home prices that will allow homes to become affordable for many Americans this year. CF Funding will provide many homebuyers with the opportunity to fund their first home this year as the lender provides home mortgages in IL, CO, TN, CA, and FL.

Consumers Believe It Is a Good Time to Buy and Sell Homes

CF Funding is happy to share that consumer optimism has continued to rise in Fannie Mae’s April 2014 National Housing Survey, as 42 percent of respondents now believe it is a good time to sell a home. This is the third consecutive month of increases, reaching an all-time survey high. Experts predict an increase in housing activity due to these results, as well as the positive jobs data released this week and decrease in mortgage rates.

The monthly housing survey evaluates consumer attitudes in regards to homeownership, renting a home, the economy, and household finances. According to the survey, the average 12 month home price expectation rose to 2.9 percent, up from 2.9 percent last month. The percentage of respondents who believe home prices will rise in the next 12 months was at 50 percent, and the percentage who believe home prices will decrease was at an all-time survey low of 5 percent. The percentage of respondents who believe mortgage rates will rise decreased to 52 percent. Those who believe rates will go down has increased from 3 percent to 7 percent. The percent of respondents who believe it is a good time to buy a home stayed the same this month at 69 percent.

CF Funding is not surprised that the number of respondents who believe it is a good time to sell has risen by 4 percent to 42 percent, as the Spring season always brings out more buyers and sellers andmortgage rates are looking great. The fact that consumers believe rental prices will increase in the next 12 months may also affect the “good time to sell” factor. The percentage of respondents who believe the economy is on the right track has increased from 33 to 35 percent over the past month, and 14 percent expect their personal finances to improve over the next 12 months, in comparison to last month’s 12 percent. CF Funding is pleased to share that 25 percent of respondents say their household income is significantly higher than 12 months ago, up 4 points from last month.

According to Doug Duncan, senior vice president and chief economist at Fannie Mae, “Our April survey results suggest that consumer confidence is moving in a positive direction… consumer attitudes about the current home selling environment have improved and now are at the most favorable level we’ve seen in the survey’s four-year history. Consistent with Friday’s upbeat jobs report, concern about job loss among employed consumers also has hit a record survey low. These results are in line with our expectations for increased housing activity and gradual strengthening of the housing market going into the spring and summer selling season."

CF Funding will keep readers updated on the state of the housing industry as future housing surveys are released. To follow the lender on Facebook, visit www.facebook.com/cffundingcorp.  To view last months’ survey results, visit http://cffunding.com/index.php/news/consumer-attitudes-are-positive-in-march-2014-housing-survey/ .

Home Prices Rise in Corelogic Report

originally posted 5-6-14 at www.cffunding.com/index.php/news/home-prices-rise-in-corelogic-report/

Today the Home Price Index by Corelogic was released, revealing an 11.1 percent increase in home prices from March 2013 to March 2014. CF Funding has previously reported that home price increases such as these allow homeowners to regain equity in their homes, a great sign of economic improvement. Home prices have now been rising for 25 months on a year-over-year basis, and are expected to continue to rise into April on the HPI. From February to March, the HPI increased 1.4 percent including distressed sales (or 0.9 percent excluding distressed sales).

Although prices have been rising for over 2 years, current home prices are still about 16 percent below their peak seen in April 2006. Excluding distressed sales, home prices are about 11.6 percent below peak prices. Corelogic predicts that home prices, including distressed sales, will increase 0.8 percent month over month from March to April. According to Anand Nallathambi, president and CEO, “Home prices continue to rise across the nation, but affordability, tight credit and supply concerns are becoming an increasing drag on purchase market activity. In many markets—especially major metro areas like Los Angeles, Atlanta and New York—home prices are being driven up at double-digit rates fueled by a lack of inventory and record levels of cash purchases.”

All states had year-over-year price increases in March (excluding distressed sales) and 23 states plus the District of Columbia are at or within 10 percent of their peak, according to the HPI report. The largest home price appreciation was seen in California at 17.2 percent, and Nevada at 15.5 percent. CF Funding’s home state of Illinois is still 26.5 percent below peak values, and Nevada is 39.9 percent below peak values. CF Funding’s hometown of Chicago-Naperville-Arlington Heights saw an 11.5 percent price increase year-over-year excluding distressed sales. As seen in the National Snapshot graph, some states such as Texas and Hawaii saw little-to-no change from peak prices (including distressed sales).

 

from www.corelogic.com

It was also reported today that mortgage rates returned to their lowest levels of 2014, with the most prevalently quoted 30 year fixed rate mortgage rate (best-execution) at about 4.25 percent. Today’s best-execution 15 year fixed was reported at 3.375% and 5 year adjustable rate mortgage at 3-3.5 percent depending on the lender. For daily updates on mortgage rates and more detailed information about mortgage loan programs, visit the CF Funding Website.

California's Short Sales at Lowest Since 2008

CF Funding is happy to share that California’s pending home sales increased significantly in March, while short sales dropped to a six-year low. According to the California Association of Realtors (CAR), “pending home sales increased more than usual [in March] and rose to the highest level in eight months… meanwhile, the share of short sales has fallen to levels last observed in 2008.”

Pending home sales increased 17.8 percent, and the PHSI (Pending Home Sales Index) rose from 97.1 in February to 114.4 in March. This is the highest index since July 2013. Although March of 2013 had about 9.9 percent more pending sales, the CAR says this decline “has been tapering over the past few months.” Equity sales, defined as non-distressed property sales, have increased over the past year and saw a 2.6 percent increase in March, reaching 87.6 percent. CF Funding expects that equity sales will continue to rise as the Spring season brings out more homebuyers and the economy continues to improve. In March 2013, equity sales made up only 71.8 percent of sales.

30 out of 38 counties in California saw a decrease in distressed sales month-to-month. Counties with the least amount of distressed sales included Alameda, Marin, San Diego, and Santa Clara. Alameda, Marin, and San Mateo also experienced the best year-over-year improvement (in reduced distressed sales), as well as Madera and Monterey counties. Declines in short sales and REO sales were significant across the state of California in March, falling from 15 to 12.4 percent. The C.A.R. says one year ago distressed sales were more than twice as high, reaching 28.2 percent.

As seen in the chart, equity sales have increased significantly since January 2012. Short sales and REO sales in California have drastically decreased, with REO sales declining 64 percent.

The inventory of properties declined in March (especially non-distressed), with the Unsold Inventory Index dropping from 4.8 months to 4 months, and the supply of REOs dropping from 3 months to 2.8 months. The short-sale inventory fell from 5 months in February to 4.7 months in March.

CF Funding is licensed in California, as well as Illinois, Colorado, Tennessee, Florida, and soon Texas and Virginia. Homebuyers in these states who are in need of a mortgage should contact CF Funding Corporation for a free consultation, as the lender compares rates and programs from multiple lenders. Call 888-344-4080 or visit www.cffunding.com for more information.

NAHB Compares Energy Savings to Age of Homes

In a recent blog post by the National Association of Home Builders, homes which are 4 years old or less were compared with older homes in regards to energy and routine maintenance costs. Of course, it is generally expected that older homes will have more maintenance costs. However, CF Funding was surprised to learn that 73 percent of new homeowners spend only $25 per month or less on routine maintenance. This is compared to the 26 percent of all homeowners who spend over $100 on maintenance costs.

The study compared information from the American Housing Survey (AHS) dating back to 2009. As seen in the chart on the left, the majority of homeowners in new homes pay much less on average for routine maintenance than the average homeowner.

Homeowners who are stuck in a decision between a higher-priced new home (less than 4 years old) and a less expensive older home should consider the facts. Not only do most new homeowners spend less than 25 dollars per month on routine maintenance, but the AHS also reported that new homeowners saw major savings in energy costs. Electricity costs for the average homeowner totaled about 81 cents per square foot per year, while newer homes averaged about 68 cents per square foot. Even lower electricity costs were seen in homes with piped gas, where homeowners spent about 50 cents per square foot per year.

Other utilities were reported similar results: while water bills averaged 28 cents per square foot per year, new homeowners saw average costs of 22 cents. The median trash bill for homeowners was 15 cents per square foot per year, and newer homes had a medium price of 13 cents. Not only do homeowners with properties less than 4 years old save on energy costs, but insurance costs can also be reduced, as the median property insurance for newer homes was 31 cents per square foot as opposed to the national average of 39 cents per square foot. According to the NAHB, “These reduced expenditures represent one of the many reasons that the current system of appraisals needs updating to reflect the flow of benefits that come from features in a new home.” Many of the benefits the NAHB is referring to may be seen in Green homes. As CF Funding reported in February, green homes have significantly contributed to the home construction market over the past few years and green homeowners frequently reported lower utility costs and better insulation. The lender is happy to see reduced energy costs for new homeowners as the quality of green home building continues to improve.

Both new and old homebuyers will need financing to support home purchases in 2014. Those who are home shopping this spring should contact CF Funding Corporation for a free preapproval and competitive interest rates on mortgage loans. CF Funding loan specialists are rated 5 stars on Facebook at www.facebook.com/cffundingcorp and on Yelp at http://www.yelp.com/biz/cf-funding-naperville

Americans are Buying Second Homes As Market Recovers

According to Fannie Mae’s report released Monday, titled “Second Homes: Recovery Post Financial Crisis,” the second home mortgage market is recovering after the housing market crash, and is expected to continue to grow. CF Funding is happy to share this sign of economic recovery. The Housing Insights report shared that second home mortgage origination has averaged about 4.6 percent of the total purchase market since 1998, and it has grown in the past few years. Fannie Mae and Freddie Mac have acquired about 64 percent of these second home purchase mortgages.

The National Association of Realtors’ survey of second home buyers, which was released last week, is used in the report to share general characteristics of second home buyers vs. those of primary residence buyers (those who have only one home). The typical second home buyer was profiled as about 47 years old, as opposed to a primary home buyer’s average age of 38. A second home buyer usually comes from a two-earner household and has a median household income of $90,660, whereas the primary homebuyer has a median household income of $74,580. The average second home buyer finances the purchase of their home about 61 percent of the time and usually puts down a larger down payment on their home than a primary homebuyer.

The increase in second home buying correlates with CF Funding’s April 2 article titled “Vacation Sales Rise Strongly in NAR Survey,” as the lender observed that more high-net-worth households gained enough confidence in the housing market to buy a recreational property last year. Fannie Mae also mentioned that “34 percent of all second home mortgages have been originated on properties located in Florida, California, and Arizona,” which makes sense as these states are located in warmer climates where many purchase vacation homes. Read the full CF Funding article here.

Fannie Mae also shared a history of the second home mortgage market, as the second home share of PMM has more than tripled from the late 90’s through about 2006, then declined through 2009. This is relatively consistent with the cycle of the real estate market. Since 2009, the second home mortgages share of all purchases has increased, as “private lenders are increasingly more willing to lend to second home borrowers.” During the housing peak (around March 2006), the share of second home mortgages peaked at more than 15 times its share compared to 1998 volumes, while other purchase mortgages were at less than 4 times their 1998 mortgages.

Although the population aged 45-64, who are most likely to buy a second home, is expected to grow more slowly than the rest of the adult population through 2060, it is still predicted that second homes will occupy a large part of real estate and mortgage business in the years to come. CF Funding looks forward to assisting second home buyers in financing their new home purchase. 

For more updates on daily mortgage news, follow CF Funding on Twitter at www.twitter.com/CF_Funding or visit our daily news feed at www.cffunding.com/index.php/news/ .

Consumer Attitudes are Positive in March 2014 Housing Survey

Last month, CF Funding reported positive results from the February Fannie Mae National Housing Survey, sharing that home price expectations rose 7 points and 68 percent of respondents said it is a good time to buy a home. This month the lender is happy to share more good news, as 69 percent of respondents now believe it is a good time to buy a home, and 68 percent said they would buy if they were going to move (up 2 points from February). The percent of respondents who believe it would be easy to get a home mortgage has increased by 7 points to a score of 52, an all-time survey high that has only been matched in January of this year.

CF Funding is happy to share that the average 12-month home price change expectation decreased from 3.2 percent to 2.7 percent. Those who expected home prices to stay the same increased by 4 points to 42 percent. The lender agrees with Mortgage News Daily’s prediction of a “pickup in home buying and selling activity this spring” due to positive consumer attitudes in the survey. As Jann Swanson reported in today’s article “Fannie Survey Hints at Warmer Spring for Housing,” over 50 percent of respondents expect mortgage rates to increase over the next year, yet most believe it will be easy to get a mortgage.

The survey also revealed an improvement in personal finances, as 40 percent of respondents said their financial situation improved during the past year, and those who expect their finances to worsen in the next 12 months decreased from 15 to 12 percent. Unfortunately, the number of respondents who believe the economy is on the right track decreased slightly from 35 percent in February to 33 percent in March.  The share of respondents who said their household expenses are significantly higher than 12 months ago decreased from 36 to 33 percent, and most respondents (58 percent) said their household expenses are about the same.

CF Funding would like to remind readers that although home prices are expected to rise, rental prices are also expected to rise. In regards to home rental attitudes, the expected 12 month rental price change was 4.2 percent, a slight decrease from last month’s 4.3 percent. The percent of respondents who believe home rental prices will increase over the next year was 52, up slightly from 51 in February. 41 percent believe rental prices will stay the same, and 4 percent believe they will go down.

According to Fannie Mae, the Monthly National Housing Survey polled a nationally representative sample of 1005 respondents between March 1 and March 23 for the results of this survey.

To keep up with mortgage news updates be sure to follow CF Funding on Facebook at www.facebook.com/cffundingcorp.