According to the Urban Institute Housing Finance Policy Center, mortgage lenders are becoming more flexible with riskier applicants. Their quarterly credit availability report found that they are lending to people with lower credit scores, higher debt-to-income ratios and smaller down payments.

The report finds that the Federal Housing Administration (FHA), Department of Veterans Affairs (VA) and the Department of Agriculture’s rural home loans are taking the highest risk levels since before the crash. In fact, Fannie Mae and Freddie Mac have steadily taken more risk since 2009. This is great news for potential home buyers, especially those with less than perfect credit scores.

“Significant space remains to safely expand the credit box,” Laurie Goodman, vice president of the Housing Finance Policy Center, says.

The current lender risk levels are very low and will still stay within the “reasonable lending standards.” Loan officers around the country have seen a creative side to the lending industry recently which gives the “credit-strained buyer” hope. John Meussner, executive loan officer with Mason-McDuffie Mortgage Corp. in San Ramon, California, says he has seen a perfect example of this.

“Recently we saw one investor roll out a product offering up to $2 million in financing for FICO scores down to 600,” said Meussner.

The loan mentioned, will allow the borrower to have made a late payment on a mortgage within the past year and have major incidents such as foreclosure or bankruptcy. Many lenders will now take a score in the mid-500s with a small down payment. In the past, Fannie and Freddie have required a FICO score of around 750 to obtain a home loan.

The requirements might be a little less risky but lenders are still doing their homework on their potential borrowers. Paul Skeens, president of Colonial Mortgage Group in Waldorf, Maryland believes that the attention to documents in unbelievable detail has kept the market from seeing a lot of defaults.

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Everyone wants to save money and have a little extra in their pocket each year. One way to do this is through saving on utilities. Energy-Efficient homes are the way to do this and here are some reasons why.

There are many benefits to owning an energy-efficient home. When it comes to utilities, 30% of homeowners say the cost to heat, cool and illuminate their home is expensive. Energy Star rated homes use 20% less energy according to the U.S. Environmental Protection Agency. Energy-efficient homes are known to sell faster and at a higher price than un-certified homes. Studies done by the National Association of Home Builders have shown that they can bring in on average about $5,000 more.

Energy-efficient homes are held to a higher standard. There are many certification rules and these can vary by region. The house itself is not the only thing that must be certified. Many contractors such as the HVAC contractor must have proper credentials and have EPA training. There is a close inspection of the homes lot design, home location, sustainability of building materials, and even access to alternative transportation to meet minimum standards.

These homes are in demand. James W. Mitchell, founder of Renewablue, a home energy consulting firm in Fort Collins, Colorado, believes that this is the only time someone will save money when borrowing it to purchase a home. When looking for an energy-efficient home look for keywords in listings such as “green”, use an “eco-savvy” agent, request past utility bills from the seller and consider an energy-efficient mortgage.

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Homebuyers have better than expected lower rates this Spring. For the first of the year many potential homebuyers called it quits with rising house prices, low inventory and mortgage rates above 5%.

“It was somewhat of a surprise to see the degree and intensity of the pullback,” said Robert Dietz, chief economist of the National Association of Home Builders. “Five percent at those pricing levels was enough to take the wind out of sails of the housing market.”

The current 4.5% rate is predicted to not rise much for the remainder of the year which means several positive outcomes for the homebuying market.

To begin, there will be more buying power. Lower mortgage rates along with rising wages gives homebuyers more leverage in the current residential real estate market. Current 4.5% rates make a $200,000 30 year-fixed mortgage $71 cheaper than at 5% which means total interest savings over the life on the loan would total $21,699.

“While folks might not have hit the bottom of the rate cycle – no one can perfectly time markets – on the historic side, these are still very attractive rates,” said John Pataky, executive vice president, chief consumer and banking executive at TIAA Bank.

Sellers will want to take the gains and run. According to evidence move-up buyers are purchasing more. The average mortgage balance for purchases has reached record levels. This is also good news for homebuyers in the lower priced home market. The move-up buyers will open up inventory in lower priced homes.

“It’s a musical chairs game,said Mike Fratantoni, chief economist of the Mortgage Bankers Association. “You need someone in the higher end to move, and it works its way down the ladder, eventually opening up an entry-level home.”

Potential homebuyers cannot control the Fed or rising home prices but there are several factors they can control when it comes to determining the interest rate they will get on a mortgage. Homebuyers can reduce their rate by the amount of money they put down. The larger a down payment the lower the rate giving the homebuyer more risk than the lender. The higher your credit rating the better the rates. For example a person with a high credit score (760 – 850) would get a 4% rate while a person with a credit score of 660 to 679 would receive a 4.5% rate on a $216,000 price with a 30-year fixed-rate mortgage.

“While folks might not have hit the bottom of the rate cycle – no one can perfectly time markets – on the historic side, these are still very attractive rates,” said John Pataky, executive vice president, chief consumer and banking executive at TIAA Bank.

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This is the question many are pondering since Madisonville’s population is just over 800 residence. According to Louisiana Lawrason Act in order to be considered a town you must have 1,001 inhabitants.

In a report issued this week by the state legislative auditor it states, “Because Madisonville had only 748 residents as of the 2010 federal census, it appears that it should be classified as a ‘village’ under its charter.”

This is a serious issue posed on the town as it even says in Madisonville’s own charter that the governor must be notified of a change in the town’s population. There will be several recommendations the town must follow from changes to the number of town board members to refining policies.

Many residents and leaders alike are not happy with the change in board members from the current five to three.

“I kind of like five people,” Brad Haddox, who serves on the Town Council said. “That’s five different considerations. … With more varied people, you have more varied viewpoints.”

How did this oversight occur? According to Haddox it was an innocent oversight. The Madisonville Charter list many governmental responsibilities that just don’t apply to today. Examples include regulating taxes on corn doctors, pet bear exhibitors, exhibitions for pay, fortune tellers, ten pin alleys etc.

Madisonville has only had a population of at least 1,001 residents in two U.S. Census reports. One in 1910 with 1,028 inhabitants and in 1920 there were 1,103 residents. Since then the town has seen a drop with the lowest population in 1990 at 659. Currently the population sits at an estimate of 831 residents.

“I don’t think we’ve been at 1,000 for 40 or 50 years,” said Mayor Jean Pelloat.

As of February 1, 2019, Governor John Bel Edwards has been notified via letter of the town’s current population. Madisonville also sent a copy of the town’s charter and additional information the Governor requested to review.
The Mayor and town officials are waiting to hear back on his decision.

As for the name town or village, many residents believe a label does not define a community.

“We are such a small town,” said Stephen Marcus, president of the Madisonville Chamber of Commerce. “We’re in a pretty small area; we kind of call ourselves a tiny little village … there’s no stigma.”

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Spring always brings warm weather, sunshine and an upbeat attitude. The home market started off slow for the beginning of 2019, but analyst believe there will be a rise in home sales Spring 2019.

The beginning of the year wasn’t what the National Association of Realtors hoped for. Pending home sales did jump 4.6% this January, however sales were 2.3% lower than a year ago. January marked the 13th straight month of year-over-year declines.

The pending home-sales index (the NAR’s tracking system that records home contract signings) did go up in January to 103.2.  Analysts believe the reopening of the partial government shutdown caused the boost from the nearly five-year low it saw in December of 2018. In the Northeast pending sales increased 1.6%, in the Midwest 2.8%, only 0.3% in the West and 8.9% in the South. The market should see the home sales from these pending contracts right around Springtime. Contracts usually stay pending on average for about 45 days until they close.

“February existing home sales should now rebound handily and with new home sales likely to head higher too, given the rising trend in mortgage demand, the gloomy housing narrative in markets and the media is set to change quite dramatically over the next few months. The market is not rolling over, and it is not a harbinger of recession in the broader economy,” said Ian Shepherdson, chief economist for Pantheon Macro.

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Rent is rising fast and many are turning back to owning vs. renting. According to the Unites States Census Bureau, in 2016 the decline in homeownership suddenly changed and started to rise. The Housing Vacancies and Homeownership survey reflects that homeownership rates rose from 63% in 2016 to 64.6% in 2018. Here are some of the reasons why this reversal has come to fruition.

Millennials had enough with living with mom and dad. In 2017, 22% of adults between the ages of 25 to 34 were living with their parents compared to the 11.6 % of adults between the ages of 25 to 34 that were living with their parents in 2005. This increase was due to the housing crisis, slow earnings growth, soft labor market and steep student loan debts. As of 2016, Millennials started to be in the position to financially own a home. The homeownership rate for those under 45 began to recover very quickly. This is an important statistic for the housing market because Millennials (those born after 1981) will outnumber baby boomers in the near future.

“Millennials have been on a buying spree the last few years,” Zillow Research economist Aaron Terrazas said.

The groundwork for the turning point hit in 2015 when rental rates rose nationally more than 6% from the previous year. This marked one of the rare times that rent rose faster than home prices.

“Rent appreciation was so high during that period that it essentially put fire under people’s feet to get up and buy,” Terrazas said. “People who may have been sitting on the fence would be incentivized to jump into homeownership,” according to Terrazas.

Rising house prices also led to a quick reaction as Milleanials feared they would be priced out of the market. Terrazas commented that, “driven to homeownership by fears that with homes appreciating so quickly that they would be locked out of buying a home in their desired area.”

Another fear was that interest rates could go up so those who wanted to own a home needed to lock in immediately.

“Maybe people thought ‘interest rates could go up, I should lock in now,’ ” Urban institute housing expert Laurie Goodman said.

Those that were affected by foreclosures during the 2008 recession are ready to buy again. Those that went into foreclosure are now able to obtain a mortgage( it takes seven years for your credit to be cleared of a foreclosure). Buyers who were burned during the housing bubble are no longer gun shy, they are beginning to reenter the housing market.

Overall the unemployment rate is in better shape than it was a decade ago and there are more people out there ready to invest their money.

“When there’s very low unemployment, when there’s been slow but steady wage growth, that tends to make households confident in their ability to make what will probably be their largest investment of their life,” said Ralph McLaughlin an economist at CoreLogic.

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The prediction this year is a challenging one for the housing market. Mortgage rates will increase as well as home prices making it harder to afford a new home. Along with the decrease in affordability, there will also continue to be a short supply of homes to purchase.

On the flip side, 2019 sees more entry-level homes being built and mortgage lenders are making it easier to qualify for a home loan. First time home buyers should have a better chance at purchasing their first home this upcoming year.

A great way to look for a good opportunity is to follow the market trends. Here are several housing and mortgage trends to watch for this year.

Supply and demand is always for the buyer or for the seller. The best time to buy is when the market exceeds the demand. The real estate market has been on the seller’s side now for almost a decade. There is just more buyers out there then there are homes for sale. Although this is not an ideal situation for those looking to purchase a home, the forecast does show there might be some fortune coming their way. Reports have shown that there will be a rise in the number of homes for sale in 2019.

Secondly, look at the home price trends. Are the home prices on the rise or holding steady? It is predicted that the prices of homes will rise this year but at a slower pace than in the previous years. The National Association of Realtors estimates the prices to rise 2.5% in 2019 to a median of $265,200 making the spike 2.2% less than in 2018 where the rise was 4.7% to a median of $258,700.

“Home price appreciation will slow down — the days of easy price gains are coming to an end — but prices will continue to rise,” says Lawrence Yun, chief economist for the National Association of Realtors.

Another trend to watch is the rise in Mortgage rates. Again, it is predicted that the mortgage rates will rise at a slower pace in 2019. A 30-year fixed mortgage should rise half a percentage point this year according to Freddie Mac compared to the 2018 30-year fixed mortgage rate which went up just under three-quarters of a percentage point.

A shy buyer’s market can be concerning. Potential home buyer’s should gauge home ownership affordability. When the prices and rates go up, it is harder to find affordable homes.

“We do worry about affordability, particularly in some areas that have lower inventory” of homes for sale, says Randy Hopper, senior vice president of home lending for Navy Federal Credit Union.

According to Hopper this will not deter prospective home buyers from purchasing a home. He explains that a quarter or half percentage point rise will only impact a mortgage payment by $75 to $100 per month on a $300,000 home for example.

Hopper states this, “isn’t insignificant, but it’s not necessarily something that impacts the buying decision.”

As far as home prices, Danielle Hale, chief economist for predicts the home prices to rise at a slow pace which will cause them to fall back in line with incomes.

Look for ways the builder’s accommodate the price increases in the housing market to make a more affordable home for potential buyers. Builder’s are building new homes smaller and more affordable.

“Continuing a multiyear trend, new single-family home size decreased during the third quarter of 2018,” wrote Robert Dietz, chief economist for the National Association of Home Builders, in a November blog post. “New home size has been falling over the last three years due to an incremental move to additional entry-level home construction.”

Homes built in 2018 averaged out to be about 2,320 square feet which is 4.9% smaller than the median size of new homes built in 2016.

Hopper comments, “I think for many years, the builders were focused on that $500,000-and-up market because the margins were healthier,” he says. “But they’re starting to find now that there’s so much pent-up demand in the lower-end-priced market that they can sustainably offer communities and new construction, and we’ve seen a lot of growth in that space.”

Another trend to be aware of is first-time home buyers. “First-timers have dominated the mortgage market for the past 10 years, and their share today is still high,” according to an Urban Institute report published this summer, which adds: “We don’t see this changing anytime soon.”

Currently first-time home buyers take out approximately 60% of purchase mortgages. Prior to the housing crisis, first-time home buyers only made up 40%. In fact, 80% of the growth in home sales for the past three years are from first-time home buyers.

Tian Liu, chief economist for Genworth Mortgage Insurance reports, “Between 2007 and 2015, our estimate is that roughly 3 million first-time home buyers delayed buying a home, and they’re reaching that age when they can no longer delay.” Liu says. “Their housing needs are really catching up with them. It doesn’t feel right to be raising a family in a rental apartment. They want to own their place. So I think those drivers will be very significant for the next few years.”

Look at the mortgage lending standards. Mortgage lenders want to make sure a borrower can repay their loans. During the financial crisis of 2008, lenders became strict on their lending standards.

Today, mortgage lenders are tending to relax the standards. There are less documents, lower credit scores and smaller down payments that are required.

This leads into what type of mortgages are being chosen by home buyers. When rates on fixed-rate mortgages go up, home buyers tend to choose ARMs (adjustable-rate mortgages).

Arms accept more risk from the borrower. In October of 2018 ARM’s consisted of 8.2% of compared to the 5.5% in 2017.

Last, watch for bidding wars. Even though 2019 is predicted to be a seller’s market doesn’t mean a seller can expect a bidding war. If a home is priced above the median for that area, sellers tend to not see a bidding war.

As a seller, Hale says, “if you’re in that above-median price point, you’re going to have to price competitively and offer incentives for buyers.”

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The housing market was a bit slower in the last half of 2018. Despite the slowdown in the sale and resales of homes, the job openings in the construction industry boomed in the last part of 2018.

The National Association of Home Builders and the BLS Job Openings and Labor Turnover Survey reported an increase in the number of job openings in the construction field. The quits rate for the construction sector jobs increased 2.8% in the last month of 2018. This was a jump from the 2.2% reported in December of 2017. The open position rate increased from 3.9% to 4.9% from the beginning of 2018 to the last half of the year. The rate reported at the end of 2017 was just 2.1%. The cycle high was 382,000 in December of 2018 which was much higher than the 149,000 reported December 2017.

The housing market will continue to thrive making the need for more workers in the construction field. The construction industry has had an overall increase in jobs since the end of the recession. It is anticipated that in 2019 the jobs might level off but there will still be a high demand in the industry.

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A high school degree can only get you so far but coupled with a college degree or a skill set can give you further career alternatives. There is a demand for career and technical education in high school. Here are some great reason why every high school should incorporate home building as an elective.

First reason why is because it’s challenging. Taking those mathematical equations a student learns on paper and applying them in a real life situation is all together different than just applying them on a high school test. Students not only have to figure the problem out on paper but they have to make it work when building a house. According to Scott Burke, who runs a home building program at Eureka High School in Eureka, Missouri, he has seen honor students who are stumped when applying geometry principles to building homes.

Second reason, it prevents slacking. Students have to work at solving the problems to be able to build. It is much more than just doing a little homework and then taking a written test.

Third reason why is it’s useful. Students get to see a real life scenario of how a subject like geometry can be applied. Students aren’t just sitting in a class room learning the subject but they are also incorporating it into the building of a structure.

Another great reason is because it’s memorable. Students are hands-on in a project. It is easier to remember an equation when they have to apply it to building a home. Math becomes relevant to a student when they physically see the outcome of a nice new home.

The last reason why is because it promotes higher achievement. In the case of Eureka High School, the evidence has been seen that the students who are in the program have an advantage over their peers.

Students need to be thinking more outside of the box and be inspired. Text books are not as inspiring as hands on experience.

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The results are in, and according to the National Association of Home Builder’s (NAHB) Housing Trends Report, 13% of adults in the United States are going to purchase a home or new home in the next 12 months. The poll was taken during the 3rd Quarter of 2018, so that is the time period covered by the survey. These new home buyers and home buyers are unique in the fact that they are taking their time in making a decision about their home purchase. Some buyers reported already taking more than 3 months to look for a home to buy, and they have not found it yet.

What is interesting about this is that these home buyers state that they will not stop looking for a home if it takes longer than expected – less than 20% to be exact. The reasons why they are having trouble finding the exact home they want to buy is that 49% of buyers said that affordability is a factor followed by 40% looking for specific features. 38% of home buyers said that they cannot find the home at the right price with the right features in a neighborhood where they want to live.

During the last quarter of 2017 and the first 2 quarters of 2018, over 50% of home buyers said that they have been looking for the right home for over 3 months. The highest percentage was during the 4th quarter of 2017. One reason also that might be affecting the ability of home buyers and new home buyers to find a home they would like to purchase is that supply has been steadily falling in the housing market of the United States. At this time, it has truly been a seller’s market with demand substantially outpacing supply. Because of this, buyers are reporting that they are getting outbid by eager competitors with bigger resources – approximately 21% of buyers reported experiencing this frustration.

So, what will these home buyers do if they cannot find the right home? 61% of home buyers said that they will continue to look in the same location. 27% said that they will look in a bigger are and 23% said they will accept a smaller or older home if the price, location, and features are right. Just 16% said they may consider a higher price range of home to buy to get what they want. Only 18% said they would give up completely.

If you are experiencing the frustration of finding the perfect home to buy with your exact features in West St. Tammany Parish, the good news is that Ron Lee Homes will be able to help you with your purchase. We can even assist you in finding land on which to build, and we can definitely accommodate most requests for features within your specified budget. If the features you are wanting are not within your price range, we have the experience to recommend work-arounds or other options you may not have considered yet. So, to assist with all of your home buying needs, Contact Ron Lee Homes today at 985-626-7619 or email


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