The New Year Starts Off With Mortgage Rates Below Last Year’s Average

A new year has brought good news for the housing industry. The +first week reported that the average U.S. fixed rate for a 30-year fixed mortgage averaged at a low 3.72%. The findings were 80 basis points below data reported a week earlier.

George Ratiu, Realtor.com’s chief economist said, “The conventional 30-year loan slid 2 basis points to 3.72% in the first week of 2020. Rates remain about 80 basis points lower than the first week of 2019.”

Ratiu predicts that employment and wage gains will fuel the housing industry. The economy will maintain a moderate growth trajectory this year.

The 15-year FRM also was at a low 3.16% which was down from this time last year’s reportings of 3.99%. The average rate dropped in just one week from 3.19% to 3.16%. The 5-year Treasury-indexed hybrid adjustable-rate mortgage also averaged 3.46% which was lower than the 3.98% reported this time last year.

“As mortgage rates remain favorable, buyers are likely to get a head start on the spring shopping season in the first couple of months of this year,” Ratiu said. “A stronger infusion of new homes in affordable price ranges would be a welcome gift for the New Year.”

Sam Khater, Freddie Mac’s chief economist, believes the rates have maintained around 3.7% for the last couple of months because of ” the combination of improved economic data and market sentiment has led to stability in mortgage rates.”

“The low mortgage rate environment combined with the red-hot labor market is setting the stage for a continued rise in home sales and home prices,” said Sam Khater.

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A 4.1% Rise From November 2018 In Construction Spending

The Census Bureau reported the November 2019 U.S. spending rate for U.S. construction is 4.1% above 2018’s rate for last November. According to the report construction spending amounted to a seasonally adjusted annual rate of $1.324 trillion.

Out of the total construction spending, spending on private construction was 1.6% above November 2018’s and is at a seasonally adjusted annual rate of $985.5 billion. Residential construction spending came in at a seasonally adjusted annual rate of $536.1 in November making it 2.7% up from a year ago.

“Single-family builders are currently reporting ongoing positive conditions, spurred in part by low mortgage rates and continued job growth,” NAHB Chairman Greg Ugalde said. “In a further sign of solid demand, this is the fourth consecutive month where at least half of all builders surveyed have reported positive buyer traffic conditions.

Homebuilders are confident in the current housing market. The National Association of Home Builders and Wells Fargo suggest the sentiment levels are at 70 points making the rate the second-highest level in 2019. The points are 10 points higher than reported this time in 2018.

The positive housing market is expected to continue in 2020. This forecast is based upon the number of applications for new building permits which were at the highest level in November 2019 than they have been in a decade.

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Interest Rates Hold Steady For 2020

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September was a Positive Month For New Home Sales

This September was reported to be 15.5% higher year-over-year due to the lower mortgage rates. The National Association of Home Builders’ data shows that sales were 7.2% higher in the first nine months of 2019 than those reported in the first nine months of 2018. This first nine months this year brought in 527,000 sales beating the 491,000 sales reported for the same time frame in 2018.

Signs show sales volume increasing with the more new homes that are reported being built. New home sales for the first nine months of 2019 were up 12.8% in the South, and 7.3% in the West compared to the first nine months of last year.

This fall is a great time to purchase a new home with the median new home sales price at $299,400. Right now, nearly 15% of newly built homes are priced under $200,000! This buyers market will not last, so if you are in the market to purchase a home, buy your new home before the new year.

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Reasons Why the Biggest Housing Boom in History Is Just Beginning

This newly completed, new construction home is located in Covington just outside of New Orleans.

The year 2006 brought one of the most profitable side jobs for Americans, flipping houses. In fact, that year, it was reported that one in ever ten homes purchased were to flip. In 2008, it all came crashing down. Many went bankrupt because they were stuck with owning flips that were on the fast pace to a dramatic depreciation in value. The housing crash not only affected the housing market, but also caused Americans to loose their jobs and businesses. Fortunately things are turning around for the housing market. Today, housing stocks are one of the best investments out there.

According to Forbes.com housing stocks are currently booming. NVR Inc., a homebuilder, is a slam dunk. It was reported that in February 2019, NVR stocks were at a 45% gain beating the S&P 500 at 10%. Those that purchased the stock back in February have made a lot of money. According to the site’s research, housing stocks will be the way to go for years to come.

Another two stocks to invest in are Vulcan Materials (VMC) and Martin Marietta Materials (MLM). Both companies sell concrete and gravel which is used a lot in the house building industry. Homebuilders use both for housing foundations, roads and sidewalks. According to the chart, these two stocks have rocketed in the past year. Revenues in the company are rising and hitting all-time highs.

Housing expert Barry Habib, founder and CEO of MBS Highway, has the insider knowledge from the top players in the US housing market. The biggest issue he sees is supply and demand. Since 2009, only 900,000 homes have been built per year. Habib says this is the lowest inventory since the 1950’s. This is one of the biggest housing shortages we have had. He says that with existing inventory, it would take under six months to sell everything currently on the market.

“The most important driver of home prices is supply and demand. And right now, there is a chronic undersupply of homes in America,” Habib stated.

Habib believes the market is about to be flooded with homebuyers. Millennials have been recorded to be the biggest generation the country has seen. The National Association of Realtors states that one in three homebuyers today is a Millennial.

“On average, folks buy their first home at age 33. Guess what the median age of Millennials is right now? 34. In the past year or two, the first wave of young homebuyers came into the market. But every year for the next decade, tens of millions of Millennials will hit home-buying age.”

This flood will definitely play an important roll in the prices of homes. Supply and demand is the most important driver for home prices. With such a tight supply in inventory the housing market will continue to boom.

What does that mean for homebuilders? They will have job security for a while to come. This fall, new home starts rose to their highest level since the summer of 2007 and building permits are at the highest level since the spring of 2007. Habib believes “the American housing boom has years to run.”

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Tips to Find the Best Loan for A First Time Homebuyer

There are many different kinds of mortgages to choose when purchasing a home. Not every mortgage is right for you. Here are some tips to follow when choosing which mortgage best fits your needs.

Do your homework. You will want to first research special mortgage programs. There are a great number of programs out there which can assist first-time home buyers. Programs can help with down payments, lower your interest rate or help with other expenses you might have such as a student loan. These programs can help you along the way by allowing you to build equity in your home. Professionals can help with finding the best program to suit your needs, check with your lender or Realtor.

Go with a local. Big programs such as federal programs are more well known but there are many programs for first time home buyers through their city or state. Detroit and Baltimore have used first-time home buyer programs to promote revitalization in their downtown areas. Many states have used programs to urge first-time homebuyers to purchase their first home in rural areas. Always check your city or state government’s websites to see if there are any programs available to assist you. Another resource would be the community development or housing department.

Don’t overlook your mortgage rate. An obvious focal point is the price of your home. This is not the only thing you should focus on. Your mortgage rate is just as important. This number can tell you how much you will pay in interest every month. The lower the rate, the less you will pay. The easiest way to lower your rate is by a good credit score. Not every first-time buyer has a solid 20 % to put down with an excellent credit score. Many lenders allow you to purchase discount points with can lower your interest rate. Purchasing points is prepaying your interest rate which lowers your overall interest rate by approximately .25%. There are positives and negatives to buying down your rate with discount points. Your lender can help you with this decision.

There’s always an adjustable-rate mortgage (ARM). This can be a great way to start off your first home buying experience. How an ARM works is simple. You will start off with a set period with a fixed rate which will then adjust after a certain period of time. In other words, if you have a 5/1 ARM, you will have a fixed rate for 5 years and then after the 5 years, your interest rate will adjust every year. The rates will not always rise but can also fall. If the rates have gone down you could end up paying less but if it goes up, you will pay more. This is a great way for a first-time to use the first 5 years to improve credit, lower debt and raise your income in order to get a 15 or 30-year fixed-rate mortgage.

Just like an employer interviews for the right employee, the same goes for the right lender. You need to talk to several lenders about getting a mortgage. Shopping around can give you negotiating power and the lowest mortgage rate. You will want to research average rates for your area.

Have your paperwork in order. When applying for a mortgage, your lender will want your monetary life story. Get all your documents together before meeting with a lender. Many lenders will not lock in a rate and start your application until they have all your documents.

Keep your finances the same. Do not make a huge financial change when you are in the process of obtaining a mortgage. Do not apply for a new credit card, get a new car loan, or change jobs. If you do this, the mortgage lender will have to start your application process all over again. You will need to wait even longer to close on your new home.

Getting a loan for a home can be a daunting task but if you do your due diligence, the process will be a lot less painful in the end.

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What to Negotiate When Purchasing a Home

Buying a home can be an exciting but daunting experience. Getting the right price is just one of the pieces to the negotiation puzzle. Here are eight things you can negotiate other than just the purchase price.

Number one is the closing date. Some buyers are in a hurry to close while others need more time. Many don’t realize that the closing date can be negotiated.

Buyers might need to move in quickly because of a new job or might need to push the date back because their kids need to finish up the current school year. As long as the date is good for both the seller and buyer the time table can be flexible.

Second comes the closing cost. There are many factors that play into the closing cost. These include the inspection fees, appraisal fees, loan origination fees, recording fees and the lender title insurance. The buyer is typically responsible for these one-time fees that are paid on the closing day. The buyer can negotiate for the seller to pay all or some of the closing cost. This has become more common as the home prices have continued to rise.

Third are the contingencies. Contingencies are basically an agreement on things that must be met before the real estate contract becomes binding. Contingencies can be based on financing, the home inspection, repairs, appraisals and more. A common contingency is the sale of a potential buyers old home before they can close on the home under contract.

Inspections are the fourth thing on the list and are an important factor when purchasing a home. No buyer should purchase a home without a professional inspection. If a seller refuses an inspection and wants the buyer to purchase as is, this can be a red flag.

The next thing that can be negotiated is repairs. Home inspections are there for the buyer’s protection. They can potentially reveal problems or defects that need to be resolved. The seller and buyer can negotiate who is responsible for repairs and what needs to be completed before the sale is finalized. Ways in which you can work this out with a seller is for them to make the repairs at their cost or negotiate a lower sales price of the home.

Number six is the appliances. Large appliances are usually included in this negotiation tactic. Make sure to ask what appliances the seller is willing to include in the sale of the home. A buyer should always know exactly what they are purchasing. It can work to both advantages. A seller might be willing to negotiate the washer and dryer into the sale or the buyer might want to make sure the seller does not leave a certain large appliance behind.

Seven is the taxes. When a property changes hands, many states require transfer taxes and fees. The buyer or seller can pay these fees. Before a real estate contract goes through, it should be decided who will pay the cost. In a seller’s market, the buyer usually pays the taxes and in a buyer’s market the buyer insists that the seller pays the taxes. A great way to get a leg up on the competition is to offer to pay the taxes as the buyer.

Last is the furniture. Usually the seller takes all the furniture when they sell their home. If a buyer loves the decor or a piece of furniture they can negotiate it into the sale of the home.

When negotiating on the purchase of a home it is always wise to use a Realtor. A real estate agent always has great bargaining skills and can get you the best deal on a home.

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