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.

Affordable Housing Programs Extended through December 2016

CF Funding is pleased to share that the Obama administration has announced the expansion of its affordable housing program. The program helps to support the construction of rental housing, and provides assistance to underwater homeowners in order to avoid foreclosures. The administration will be tapping into Treasury funds in order to support these programs. The Home Affordable Modification Program was set to expire at the end of 2015, but is now extended for another year. According to the Washington Post, the program has “reduced the payments of about 1.3 million homeowners, far short of its initial 4 million projection.”

The announcement was scheduled to coincide with the Making Home Affordable program’s 5^th anniversary, as the program was introduced in 2009 (after the housing crash) as a means of stimulating the economy and improving the housing industry. As CF Funding has shared previously, the housing industry has come a long way since then. In CF Funding’s April press release “Underwater Homes at Lowest Level in Two Years,” the lender shared news that foreclosures and shadow inventory are continuously decreasing, and that an increase in home values has allowed homeowners to regain equity. Increased equity has allowed many homeowners to refinance or invest in remodeling projects. However, more improvement is needed to reach peak levels of housing activity.

The program is now extended through December 2016, according to US Treasury Secretary Jack Lew. “We need to continue to be there for homeowners who are facing foreclosure, those who are struggling with increasing interest rates on their modified mortgages, and those whose homes are caught underwater,” Lew said. The program not only helps to construct affordable rental housing, but allows state housing finance agencies to underwrite multifamily FHA loans. In doing so, the finance agencies take on a risk, as they share any losses from those loans.

The new program will receive anywhere from 500 million dollars to 1 billion dollars in annual funds from the Treasury and the FHA, in comparison to 363 million dollars which the FHA provided to the program last year.

The administration also hopes to bring back the private sector in order to reduce the government’s role in the mortgage market. The market is currently dominated by Freddie Mac and Fannie Mae, which are government-owned mortgage firms. Lew said he has directed his team “to bring investors and securitizers together in the months ahead so we can uncover new paths to increase private investment.”

CF Funding will keep readers updated on mortgage and housing news on the lender’s blog at http://cffundingcorporation.blogspot.com .

Builder Confidence Rises in June as Housing Market Recovers

CF Funding is glad to see that builder confidence is rising again, as the NAHB/Wells Fargo Housing Market Index rose 4 points this month to a score of 49. A score of 50 or higher means more builders than not feel confident about the state of the housing industry. Limited availability of labor and other factors contributed to scores in the lower 40’s over the past few months, but Kevin Kelly says “a four-point uptick in builder sentiment is a welcome sign and shows some renewed confidence in the industry.”

As CF Funding has mentioned previously on the lender’s blog, the HMI results measure factors such as current sales, sales expected over the next 6 months, and traffic of prospective buyers. Builders’ responses from the survey are used to calculate a score from 1 to 100. The survey has now been conducted for 30 years.

All three indexes showed positive results in June, with current sales conditions increasing by 6 points to a score of 54. Expected sales conditions over the next 6 months rose 3 points to a score of 59. Buyer traffic increased 3 points to a score of 36. Although CF Funding is disappointed to see the buyer traffic score and overall score under 50 points, the lender is looking forward to further gains in builder confidence and expects all three indexes to rise in the coming months.

Regional HMI scores are also calculated, with the Midwest showing similar results as the overall survey, an increase of 4 points to reach 49 this month. The Northeast currently holds the lowest regional score of 33, and the West holds the highest regional score at 53.  On a 3-month average, the South and Northeast rose 1 point to 49 and 34. The west was unchanged at a score of 47. The Midwest fell 1 point to a score of 46.  NAHB Chief Economist David Crowe explained in a press release that “Consumers are still hesitant, and are waiting for clear signals of full-fledged economic recovery before making a home purchase… builders are reacting accordingly, and are moving cautiously in adding inventory.” Unfortunately for buyers, lower inventory usually means higher home prices due to less competition from other sellers.

Luckily, interest rates remain at historic lows, with slight decreases seen today in both 30-year and 15-year fixed-rate mortgages, as well as JUMBO and ARMs. CF Funding will keep readers updated on interest rate changes and the state of the housing industry on the lender’s Twitter page at www.twitter.com/CF_Funding.

Purchase and Refinance Applications Increase

CF Funding shares positive news for the housing market today, as both refinance and purchase applications have increased for the week ending June 6. The Market Composite Index by the MBA reported yesterday that mortgage applications increased by 10.3 percent last week, which is a 22 percent increase from the previous week (on a seasonally adjusted basis). Readers should note that Memorial Day fell on the previous week, however, data was adjusted to reflect the holiday.  

The refinance index saw an increase of 11 percent from the previous week, and the purchase index saw an increase of 9 percent from the previous week, on a seasonally adjusted basis. The purchase index increased by 19 percent compared to the previous week on an unadjusted basis. However, unadjusted purchases were still 13 percent lower than the same week last year. CF Funding is confident that both purchase and refinance indexes will continue to rise as the housing market improves this year.

Refinances are still representing a large percent of mortgage activity, as the refinance share increased to 54 percent on the index last week, from 53 percent the previous week. Adjustable-rate mortgages were unchanged, representing 8 percent of total applications on the index. Interest rates increased slightly last week, as the reported 30-year fixed contract interest rate (for loans $417,000 or less) was 4.34 percent, up from the previous week’s 4.26 percent. Jumbo 30-year fixed rates also increased, at 4.27 percent last week in comparison to the previous week’s 4.22 percent.

The average interest rate reported for 30-year FHA loans increased slightly, from 3.99 percent to 4.06 percent. 15-year fixed-rate mortgage interest rates also increased from 3.39 to 3.43 percent. CF Funding is pleased to see that the increase in interest rates has not slowed down applications, as rates are still historically low and home affordability is rising. As seen in the graph, current rates near 4.5 percent are much lower than rates seen 5 years ago near 5.5 percent.

Today, rates saw a slight decrease with the best-execution 30 year fixed rate mortgage near 4.21 percent, in comparison to yesterday’s 4.25 percent. The 52-week low is about 3.97 percent, according to Mortgage News Daily, and the 52 week high is about 4.85 percent. Those interested in mortgage rate updates may find up-to-date information through the CF Funding website at www.cffunding.com/index.php/mortgage-rates.

Mortgage Credit More Available, Rates Remain Low

CF Funding is pleased to share that mortgage credit is becoming more available, according to the Mortgage Credit Availability Index (MCAI). In the month of May, mortgage credit availability increased by about 1.4 percent, from 113.8 in April to 115.1. Some investors have lowered credit score requirements for FHA loans, which had an effect on the score. JUMBO loans also become slightly more available in May. 

As seen in the graph, the index benchmarked to 100 in March 2012. The Mortgage Credit Availability Index did not exist during the housing boom, but an expanded historical chart has been released which reveals credit availability scores as high as 850 in 2006. Scores quickly dropped from October 2006 to October 2008 to levels near 100, and have remained close to 100 for the past six years. CF Funding is happy to see credit availability increase, although the pace is slow.

The MCAI uses several factors to calculate credit availability, including credit scores, loan types, LTV ratios, and other factors. Underwriting data from over 85 lenders and investors are used to create the index.

In other mortgage news today, interest rates were relatively unchanged in response to the Employment Situation Report. Total nonfarm payroll employment increased by 217,000 in May, but the unemployment rate remained at 6.3 percent. Most major worker groups (adult men, adult women, whites, blacks, and Hispanics) showed little to no change in unemployment in May.  The number of long-term unemployed was nearly unchanged as well. As a response, the most prevalently quoted conforming 30-year fixed rate remained at about 4.125 to 4.25 percent, according to Mortgage News Daily. Best-execution rates for FHA/VA today are near 3.75 percent, and 15 year fixed rates are near 3.375 percent. Interest rates for a 5-year adjustable rate mortgage are about 3 to 3.5 percent, depending on the lender. These rates are calculated based on an ideal scenario and may vary based on credit scores and other factors.

Although interest rates have risen since last year, rates are still considerably low in comparison to previous years. Over the past 20 years, the rate for a 30-year fixed rate mortgage reached as high as 8.5 percent (in 2000) and 8.8 percent in 1995.

CF Funding regularly reports mortgage interest rates on the lender’s website at www.cffunding.com/index.php/mortgage-rates. Those looking to refinance and take advantage of historically low rates may contact the lender by calling 888-344-4080.

Consumer Confidence Rises in May

CF Funding is pleased to share that consumer confidence has risen in May to a score of 83.0. The Consumer Confidence Index, provided by the Conference Board, had decreased in April to 81.7. The index is now at its second-highest reading since 2008, with March of this year slightly higher at a score of 83.9.

The lowest score seen in the Consumer Confidence Index was 25.3 in February of 2009. Consumer confidence has risen significantly since then, but is not yet at its peak  pre-recession levels. In 1985, the index was at a score of 100. Consumer confidence in regards to present-day conditions improved in May, with those stating business conditions as “bad” declining from 24.8 to 24.1 percent. Those who believe jobs are “plentiful” rose about 1 percent from 13.0 to 14.1, and those who believe jobs are “hard to get” decreased from 32.8 to 32.3 percent.

Consumer expectations increased in May, with those expecting business conditions to improve (over the next 6 months) increasing from 17.2 to 17.5 percent. Those expecting business conditions to worsen decreased from 10.5 to 10.2 percent. Confidence in the labor market improved slightly, with those expecting more jobs increasing from 14.7 to 15.4 percent, and those expecting their incomes to grow increasing from 16.8 to 18.3 percent. According to Lynn Franco, Director of Economic Indicators at The Conference Board, “Consumers assessed current conditions, in particular the labor market, more favorably. Expectations regarding the short-term outlook for the economy, jobs, and personal finances were also more upbeat. In fact, the percentage of consumers expecting their incomes to grow over the next six months is the highest since December 2007 (20.2 percent).”

Home prices rose slowly in March, according to the S&P/Case-Shiller Index released this week. The index for March revealed a 12.4 percent increase in home prices in comparison to February’s 12.9 percent. 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. Las Vegas had one of the highest annual returns at about 21 percent. Only two cities in the index have set record highs since the housing crisis: Dallas, TX and Denver, CO. CF Funding is happy to be a part of the growing housing industry in these cities as the lender is licensed in both Texas and Colorado.

For more updates on home prices, mortgage rates, and housing industry news, follow CF Funding on Facebook at www.facebook.com/cffundingcorp or visit the lender’s news feed at www.cffunding.com/index.php/news.