Rental Prices Rising as Interest Rates Remain Low

As the weather improves and Spring homebuying season is upon us, many renters are also shopping for new apartments. Unfortunately, rental prices are rising at the fastest pace since the recession, according to the apartment market research company Axiometrics Inc. At the same time, interest rates on a home mortgage are expected to stay low for years, as Federal Reserve Bank of New York President William Dudley shared in a speech today. CF Funding predicts these factors will combine to form a boost in housing activity in the coming years.

As the economy has improved and demand for apartments has risen, landlords were able to raise rental rates to an average $1,136.88 in April, which is 3.4 percent higher than in April 2013. Rental prices have seen the biggest spike this year since the recession ended in 2009. In a blog post from April 30^th, Stephanie McCleskey shared that “In Atlanta… only 9% of renters can afford apartments build in the past two years, compared with 22% of renters for units built in the previous cycle,” according to the research company’s affordability scale, which assumes 100 percent of residents can afford the least expensive apartment’s rent per unit.

In an updated blog post, the research company shared today that the apartment market is still strong, however “we still predict that the rate of effective rent growth and occupancy will moderate by the end of the year,” said KC Sanjay.

CF Funding is happy to share that buying a home is still affordable, as interest rates are still near 2014 lows and are expected to stay low. CNN Money shared today that there are three major reasons why the Fed may keep interest rates “below historic averages for the long haul,” based on William Dudley’s speech today. Dudley indicated that the economy is still too weak to raise interest rates, as the Great Recession “scarred households and businesses” and the housing industry faces “several significant headwinds.” Dudley emphasized the issues of mortgage credit availability for those with low credit scores, student loan debt burdens, and housing supply. Dudley also shared that as a large portion of Americans are retiring, the potential for economic growth is smaller than it was in the 1990s.

On a positive note, Dudley expects the federal rate to stay “well below” rates seen in a booming economy, which were as high as 4.25%.  CF Funding will keep readers updated as interest rates may change throughout the year on their website at www.cffunding.com/index.php/mortgagerates. Renters who are considering buying a home may contact the lender at 630-328-8900.

Housing Starts Rise Over 26 Percent

The U.S. Department of Housing and Urban Development has released the new residential construction statistics for April 2014, revealing that privately-owned housing starts increased by 13.2 percent last month, in comparison to the March revised estimate. CF Funding is happy to share that privately-owned housing starts were also up 26.4 percent in comparison to April 2013’s numbers. Increases in housing starts are an indicator of the housing industry’s recovery.

Building permits also rose in April, as privately-owned units were up 8.0 percent from the revised March rate of 1,000,000, reaching a seasonally adjusted rate of 1,080,000. Single-family building permits were up 0.3 percent from the revised March rate of 600,000, reaching 602,000. April marks the third month of permits reaching over 1 million annually.

Single-family housing starts were up 0.8 percent from March to reach 649,000. CF Funding is pleased to see that housing starts improved in every region in April. Privately-owned housing completions were down slightly (3.9 percent) from the revised March estimate. However, the 847,000 privately-owned completions were still 21.2 percent above April 2013’s rate or 699,000.

According to Doug Carroll of USA Today, “Bad weather was fingered as the main explanation for a slowdown in the housing market and the economy during the winter months. April’s housing starts report, along with better employment numbers, could be a sign that the economy will rebound in the second quarter.” CF Funding has explained previously on their blog the effects of bad weather on the housing market.

In other news from the HUD, the average size of newly constructed single-family homes increased during the first quarter of 2014, from 2,656 square feet to 2,736. The median rose from 2,465 square feet to 2,483. As seen in the following chart from the NAHB, there is a clear upward trend of increasing home sizes post-recession.  A new mix of buyers may also be contributing to the upward trend.

The NAHB says the recent rise is “consistent with the historical pattern coming out of recessions… home sizes fall into the recession as some homebuyers cut back, and then sizes rise as high-end homebuyers, who face fewer credit constraints, return to the housing market in relatively greater proportions.” CF Funding has noticed this trend as the lender finances jumbo home loans, construction loans, and second home purchases. The lender recently shared that second home purchases are increasing as the housing industry improves and a rise in home equity allows many homeowners to complete a cash-out refinance or second mortgage.

For more housing industry updates, follow CF Funding on Facebook at www.facebook.com/cffundingcorp.

Housing Affordability and Refi Applications Increase

Originally posted on the CF Funding website at www.cffunding.com/index.php/news on May 15, 2014

CF Funding shares good news from the National Association of Home Builders’ Housing Opportunity Index (HOI) today as lower home prices and steady mortgage rates caused higher home affordability in Q1 2014. According to the index, 65.5 percent of new and existing homes sold between January and March were considered affordable. The index is adjusted based on the U.S. median income, which was $63,900 in the first quarter. The HOI increased from a score of 64.7 in the fourth quarter of 2013 to 65.5 percent in the first quarter 2014.

Syracruse was the most affordable in Q1 at a score of 93.7, where the median income was $67,700. Also rated highly were Buffalo-Niagara Falls, Youngstown-Warren-Boardman, and Ohio-Pennsylvania. All of the least affordable small markets were in California, including Santa Cruz-Watsonville, Napa, and Salinas.

As CF Funding has stated previously, buying a home in the present market can actually be more affordable than renting. As NAHB Chief Economist David Crowe said, "As home prices and mortgage interest rates are unlikely to go down, the first quarter HOI is another indicator that this is an opportune time to buy." CF Funding hopes to see more renters achieve the dream of homeownership as the market improves in 2014.

The MND NewsWire also reported positive housing news today as mortgage and refinance applications rose at the fastest pace in a month. According to the Market Composite Index, mortgage application volume increased by 3.6 percent on a seasonally adjusted basis, for the week ending May 9. The Refinance Index increased 7 percent in comparison to the week before, which is the best increase in nearly a month. Interest rates also decreased last week with the average 30-year fixed-rate mortgage at about 4.39 percent, the lowest rate since November 2013. The average contract interest rate for a 15-year fixed-rate mortgage was also at its lowest since November 2013 at about 3.48 percent.

According to CF Funding loan officer Robert Sepka, “The increase in applications has been evident this week as many spring shoppers took advantage of low interest rates and refinanced or purchased a new home with us. It is a great time to buy as interest rates and home prices are expected to rise later in the year.” 

For more updates on the housing industry and current mortgage rates, visit www.cffunding.com or follow the lender on facebook at www.facebook.com/cffundingcorp.

Housing Market Index at Highest Since Q1 2008

The National Association of Home Builders released their 55+ Housing Market Index yesterday, and CF Funding is pleased to share that the Q1 2014 rating is now at its highest level since 2008. The 55+ HMI has now seen improvements for 10 consecutive months year-over-year. According to Steve Bomberger, chairman of the 50+ Housing Council, “Rising house prices and low interest rates are helping baby boomers sell their existing homes at a favorable price and in turn, purchase a new home more suited to their current lifestyles.” As CF Funding has mentioned previously on their blog, rising equity and low rates have also allowed many 55+ homeowners to buy second homes or remodel.

The Housing Market Index measures builder sentiment in regards to current sales, prospective buyer traffic, and anticipated six-month sales for both the single-family home market and multifamily condominiums. The results are measured on a scale of 1-100, so a result above 50 means more builders than not view conditions as “good” or traffic as “high.” This quarter, present sales rose 6 points (year-over-year) to reach 52. Expected sales for the next six months rose by 9 points (year-over-year) to reach 62. Traffic of prospective buyers remained the same from the previous quarter and year-over-year at 41.

The multifamily condo HMI rose one point to reach 39, which is the highest first-quarter reading in the 55+ HMI’s history. In Q4 2008 the multifamily condo HMI was as low as 12, and the all-time low was reached in Q2 2010 at a score of 7. Present Sales in multifamily condos saw a year-over-year increase of 4, and sales expected in the next 6 months saw a year-over-year increase of 5. Unfortunately, traffic of prospective buyers decreased year-over-year by -6, however, this quarter held steady with Q4 2013’s score of 32.

Multifamily rental indices saw a slight decrease in present production to reach 42 this quarter. Future demand increased one point to reach 59. CF Funding agrees with NAHB Chief Economist David Crowe’s statement that “The 55+ segment of the housing market is stronger now than it was a year ago… but there are still some headwinds hampering a stronger recovery.” Crowe also stated in a press release that “builders in many markets are facing tight credit conditions and lack of lots and labor.” CF Funding would like to remind those who are looking to refinance or remodel that credit guidelines have changed and those who were previously not eligible may qualify for a new mortgage or construction loan. Contact the lender today at (888)344-4080 for more information.

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.