04.13.09
Good News! Interest rates are still below 5%…and Austin contiues to “Hold Steady”
Austin 2nd fastest growing city in the nation
Austin Business Journal
Austin was the nation’s second-fastest-growing metropolitan area between 2007 and 2008, according to new data from the U.S. Census Bureau.
The population in the Austin-Round Rock area grew 3.8 percent to 1.65 million between July 2007 and July 2008. Among major U.S. metros, that growth rate was second only to Raleigh-Cary, N.C., which experienced a 4.3 percent population uptick during the 12-month period.
Large metro areas — those with 2008 populations of 1 million or more — were home to nine of the 10 fastest-growing counties. Texas had the largest number of counties on the 100 fastest-growing counties list with a total of 19. The Lone Star State was also home to 10 counties among the 25 with the highest numerical gains.
Four metro areas–including two in Texas–increased their populations by more than 100,000 people between 2007 to 2008: Dallas-Fort Worth (147,000), Houston (130,000), Phoenix (116,000) and Atlanta (115,000).
What Did Interest Rates Do Last Week?
** based on Freddie Mac weekly average survey **
30-yr Fixed – Slightly Higher
Last Week: 4.87%
Previous Week: 4.78%
1yr Ago: 5.88%
15-yr Fixed – Slightly Higher
Last Week: 4.54%
Previous Week: 4.52%
1yr Ago: 5.42%
03.24.09
Mortgage Interest Rates Drop Below 5%!!
What Did Interest Rates Do This Week?
** based on week’s average with 1pt **
30-yr Fixed – Lower
This Week: 4.77%
Last Week: 5.03%
1yr Ago: 5.87%
15-yr Fixed – Lower
This Week: 4.47%
Last Week: 4.64%
1yr Ago: 5.27%
Highlight of This Week’s Major Economic Reports
I’ve been proclaiming that the only thing that would cause rates to come down drastically again is if the Fed announced that it would buy up even more mortgage-backed securities; and, sure enough, that’s exactly what they did. With a renewed commitment of $750 billion to buy up Fannie Mae and Freddie Mac – and even FHA-originated – loans, mortgage rates tumbled this week, as the Fed all but guaranteed to buy these debts (regardless of market conditions). Mortgage rates fell to an average of 4.5% on Thursday, but it’s expected they’ll settle into 4.75-5.25% territory for the foreseeable future.
The Fed is willing (and able) to keep dishing out billions of dollars into the financial markets, since inflationary concerns remain relatively tamed. The Producer Price Index posted only a modest gain of 0.1% in February, while the Consumer Price Index nudged higher by 0.4%.
From an economic standpoint, despite a lack of “warm and fuzzy” news to help us feel more confident about an economic recovery later this year, we do continue to see signs of stability across the spectrum. Housing Starts, for example, was up 22% over last month, which was the first noticeable increase in recent history. Manufacturing, consumer confidence, and weekly unemployment claims are all still in negative territory, but at least the numbers have curtailed somewhat recently, which at least gives us hope for a bottoming out.
What to Look for Next Week
February’s home sales data will be the main headliners for the week but will likely have little influence on the direction of mortgage rates.
Short-Term Rate Outlook
Stable
Stay Informed: What’s in the News
“Under 5%, Mortgages May Be Near the Bottom” from The Wall Street Journal
The Federal Reserve is going to extraordinary lengths to push down long-term interest rates, including home-mortgage rates. But those hoping mortgage rates will fall sharply from current levels, already historically low, may be disappointed.
Mortgage firms Thursday were quoting rates averaging 4.75% on 30-year fixed-rate mortgages, according to Zillow.com, a real-estate information service. That is down from more than 5% two days ago and about 6% in mid-November. But further big declines will be hard to achieve, partly because the mortgage-lending market has grown less competitive in the past year as hundreds of small banks and independent mortgage lenders have collapsed. The big banks that dominate the market are eager to boost their profits margins, not give deeper bargains to consumers.
“Austin #2 Healthiest Housing Market for 2009” from BuilderOnline.com
Nine years ago, during the tech bust, some builders felt that Austin was too crowded and left. The bloom is back on Austin’s yellow rose now; it moved up the leader board to become the sixth largest home building market last year. Job creation explains the move. While other markets lost employment, Austin added 17,400 jobs last year, 2.3 percent growth rate. It helps that Austin is home to both a major university, The University of Texas, and the state capital. Existing homes cost a little bit more in Austin than other Texas markets, roughly $188,600, but that’s still below the national average. Also, Austin is one of the few metro areas in the country where median prices actually rose in 2008–2.7 percent. Amazingly, Austin now generates more home building activity than Chicago, which has six times more people.
“Rising Home Values May be Silver Lining for Austin’s Housing Market” from Community Impact
03.10.09
Free First-Time Homebuyer Helping Hand Program
My Intentions For The First-Time Homebuyer Helping Hand Program
Inform & educate you about all the aspects of purchasing a home.
- Illustrate how homeownership is a key component in your plan for the future.
- Provide a guide to help you reach your goals with ease and confidence.
- Demystify the buying process.
- Be your resource for all things Real Estate related.
Simply put, I intend to help you get clear about the possibility and benefits of homeownership, understand how to achieve the dream and be your advocate when you choose to move forward.
The reason I do what I do is…
I remember what my experience was like as a first-time home buyer. I was excited about the possibility but did not know where to start or who to trust. Setting out on my own, I felt pressure, anxiety, and confusion. I wanted information. I would have felt more confident and relaxed understanding the process beforehand. I wanted guidance. I quickly realized an agent who listened and who was willing to collaborate with me to reach my goals was what I needed.
However, being in the business a few years now has made me aware that different people want different levels of guidance through the home buying process. Communication is the key to a successful partnership. By providing the materials in this program, I hope to ease your fear and confusion. I want to empower you to make informed decisions about your future. Moreover, I believe in collaborating with you to help you achieve your individual and unique goals—If that is what you choose.
03.05.09
FHA Mortgages “In a Nutshell”
From Jack M. Guttentag, “The Mortgage Professor,” Yahoo Finance Article
In early 2009, FHA’s market share of new purchases was back to about 15 percent, and its share of refinances was substantially higher.
The FHA Market Niche: An FHA borrower in early 2009 … 1) Doesn’t need a loan larger than the FHA maximum in the borrower’s county; 2) Can’t put more than 3.5 percent down, which is the FHA requirement; 3) Is not eligible for a VA loan, which allows zero down; and 4) Can’t be approved for a conventional loan but can be approved under FHA’s more liberal underwriting rules.
A borrower who can put 10 percent down on a loan smaller than the FHA maximum and can be approved for a conventional loan will usually do better with the conventional loan, but there can be exceptions — see below.
Down Payment Requirements: FHA borrowers in some cities, counties, or states have access to special programs that eliminate the need for a down payment by offering second mortgages at favorable terms. Usually no payments are required on the second mortgage until the house is sold. The public agencies offering these programs have their own eligibility rules that are independent of FHA. The only generally available zero-down loans are VAs and USDA loans in rural counties.
Underwriting Requirements: FHA will accept lower credit scores than are acceptable on prime conventional loans and are more forgiving of past mistakes. FHA will forgive a bankruptcy after only two years and a foreclosure after three years.
Mortgage Insurance: FHA borrowers pay a monthly mortgage insurance premium of ½ percent per year (.55 percent on loans with less than 5 percent down), and an upfront premium of 1.75 percent, which is almost always included in the loan amount. In contrast, most conventional loans have only a monthly premium which is higher than the FHA monthly premium but disappears at 20 percent down. Because of the higher mortgage insurance premiums, an FHA will be more costly to a borrower when the rate and points are the same.
Differences in Rate and Points Between FHAs and Conventionals: In shopping lenders who offer both FHA and conventional loans, I have found that, in many cases, the rate and points quoted on FHAs are higher. Lenders often charge larger markups on FHAs, partly because they are more costly to originate, and also because “they can.” There isn’t as much competition for FHAs because a large proportion of brokers and smaller lenders don’t offer them.
On the other hand, I found that some lenders quote the same or even lower rates and points on FHAs. This kind of market fragmentation, which surprised me, appears to be a consequence of the financial crisis. It places an added burden on borrowers shopping for the best deal, as if that weren’t already difficult enough.
Comparing Prices: Borrowers should be able to compare the all-in costs of an FHA and a conventional by comparing their APRs. The APR takes account of the rate, points, other lender fees, and all mortgage insurance premiums. Unfortunately, the APR assumes that all loans run to term, which makes it deceptive for any borrower who expects to have the loan for less than 10 years.
03.02.09
Mortgage and Market Update
What Did Interest Rates Do This Week?
** according to Freddie Mac survey **
30-yr Fixed – Slightly Higher
This Week: 5.07%
Last Week: 5.04%
1yr Ago: 6.24%
15-yr Fixed – Unchanged
This Week: 4.68%
Last Week: 4.68%
1yr Ago: 5.72%
5/1 ARM – Slightly Higher
This Week: 5.06%
Last Week: 5.04%
1yr Ago: 5.43%
Highlight of This Week’s Major Economic Reports
With many of the able buyers still waiting in anticipation for the government to slash mortgage rates to 4.5% — or, gasp, maybe even to 4% — it’s not much of a surprise that sales of new and existing homes continue to tumble. January saw Existing Home Sales fall 5.3% nationally, while New Home Sales dropped 10%. The good news, however, is that inventory levels are continuing to drop; and prices, while still declining, are overall holding firm as the market tries to find a balance between supply and demand.
What to Look for Next Week
February’s employment report will be the headliner for the week, and the numbers aren’t expected to be pretty. Weekly unemployment claims have averaged 600K over the past few weeks, so it’s anticipated that the nation’s unemployment rate will rise again. The silver lining to this dreary projection is that it may help mortgage rates improve or at least hold steady.
Short-Term Rate Outlook
Stable
Stay Informed: What’s in the News
“Texas Home Prices Up” from the Texas A&M Real Estate Center
Latest home appreciation rates released this week by the Federal Housing Finance Agency (FHFA) indicate Texas home prices increased 2.1 percent last year.
Midland led the way with a 10.4 percent increase between fourth quarter 2007 and fourth quarter 2008. At the other end of the spectrum were Odessa and Brownsville, where prices fell 2.7 percent and 2.6 percent, respectively.
In the final quarter of 2008, Texas home prices increased 0.2 percent.
“The data indicate what we have believed all along,” said Real Estate Center Research Economist Dr. Jim Gaines. “Texas fared well in 2008, especially compared with the rest of the country.”
According to FHFA, here’s how home prices in select Texas cities did last year:
Austin–Round Rock up 4.4%
College Station–Bryan up 5.5%
Dallas-Plano-Irving up 1.9%
Houston–Sugar Land–Baytown up 3.7%
Killeen–Temple–Fort Hood up 2.5%
San Antonio down 1.6%
Waco down 1.7%
Nationally, prices dropped 4.5 percent last year for the overall index (which includes financings and refinancing) and 8.2 percent based on purchases-only data.
“Bernanke Sees Chance of Recovery in 2010” from Inman News
If measures to prop up banks, prevent foreclosures and stabilize the financial system succeed, there is a “reasonable prospect” that the current recession will end this year and that 2010 will be a year of recovery, Federal Reserve Chairman Ben Bernanke told lawmakers Tuesday. Federal Reserve policymakers expect unemployment to grow from 7.6 percent at the end of 2008 to nearly 9 percent by the end of the year before easing in 2010, Bernanke said in his prepared remarks to the Senate Banking Committee.
02.27.09
First Time Homebuyer Tax Credit
Got questions on the new first-time homebuyer tax credit? Check out Federal Housing Tax Credit for general guidelines and provisions for this great new incentive.
02.03.09
Austin Real Estate Forecast
Here are a few notes from Austin Metro Study’s 4th Quarter briefing last week. Overall, the picture for 2009 in Central Texas is an essentially flat market, although still ahead of the rest of the nation in positive indicators. Some details from the report given by Director Eldon Rude follow.
The Austin American Statesman Article from Jan. 28th was printed with an incendiary headline (“Key home price index falls a record 18.2 percent;” and included no information on Central Texas specifically. The article was a reprint from the New York Times, and the statistics did not include numbers from any Texas market except the Dallas Metro area. The Central Texas housing market remains relatively stable, and at this point one of our biggest hurdles is negative public perception fueled by articles like these.
Month-of-supply of new homes in Austin is a healthy 5.3 months, vs. an average of 11.5 months nationally.
Austin leads the country (all Metro Study Areas) in home appreciation, at 5.5% in 3Q 2008.
Interest rates are at their lowest in 30 years. It’s important for home buyers to understand how powerful a factor interest rates are in terms of their buying power. For example, at 5.2% on a conventional loan (10% down, $60K household income), borrowers have the buying power for a $224K home. At 6.5%, buying power drops to about $180K.
Texas remains #1 in job growth, although job creation will decline in 2009. We need news ways of marketing and selling homes, other than via relocations.
MLS sales are off 20%, but we have a very tight months-of-supply averaging 5.4 months. (Note that the MOS in the higher price ranges is much higher, at 16 months for resale and 20.9 months for new homes over $750K.)
New home starts are at 50% where we were in 2006. The shrinking supply of new homes will help price appreciation as demand returns.
Issue to watch: currently we have an inventory of vacant developed lots at 26,338, or 39.4 months-of-supply. Lake Travis South has 265 MOS of vacant developed lots. Lowest MOS of lots is in Georgetown West, Southern Travis County, Central and Central East Austin.
Threats to Central Texas include economic unknowns at the national level, local job losses, tight availability of financing, and increasing foreclosures.
Boosters to the local housing market include consumer confidence from Democratic areas who are feeling good about the political scene, possible benefits from the economic stimulus package, lack of a housing price bubble in Central Texas, low interest rates, and manageable inventory of homes for sale.
