Hood Canal Real Estate, Mortgage, and Economy – www.hoodcanalliving.com

Hood Canal Real Estate, Mortgage, and Economy - www.hoodcanalliving.com

Interest Rates Move Back Toward Yearly Lows: The factors influencing interest rates would typically suggest lower interest rates. Turmoil in the middle east, Fed statements that the economy still needs support to achieve a self sustaining recovery, elevated unemployment and still tepid recovery measurements all suggest that rates could move even lower. The restraining factor currently is increased inflation measurements. The most recent version showed inflation right at Fed targets of 2% annual increases. Rates have been typically below this number and current levels may be a temporary bump. For now we are in a holding pattern around current levels without an observable trend up or down. .  

Industry News

"You're hot then you're cold." Katy Perry. Inflation is heating up, while the housing market shows signs of cooling. Meanwhile, the Fed continues to taper its massive Bond-buying program at a steady pace.
The hot housing market from 2013 is cooling off as the second half of 2014 approaches. May Housing Starts fell by 6.5 percent from April to an annual rate of 1.001 million units. Housing Starts measure the number of new residential construction projects during any particular month. Meanwhile, Building Permits, a sign of future construction, declined by 6.4 percent to an annual rate of 991,000. In addition, Freddie Mac's 2014 Economic and Housing Outlook revealed that single-family housing remains weaker than Freddie Mac projected six months ago, while multi-family dwellings appears to be on track.

There was some positive housing news, as the National Association of Home Builders Housing Market Index rose to 49 in June, up from 45 recorded in May. The reading for June is one point shy of the 50 threshold, the level that's considered good for new construction conditions.

On the inflation front, the Consumer Price Index for May came in hotter than expected. This is significant because inflation erodes the value of fixed assets like Mortgage Bonds. And since home loan rates are tied to Mortgage Bonds, hotter inflation could spell trouble for home loan rates as we move further ahead this year. Also of note, the Federal Reserve announced that it will continue to taper its massive Bond-buying program. Beginning in July, the Fed will purchase $15 billion in Mortgage Bonds and $20 billion in Treasuries per month, an overall decrease of $10 billion.

What does this mean for home loan rates? Tensions overseas, the Fed's Bond-buying program and weak economic reports have been key factors in helping Bonds and home loan rates improve this spring. However, hotter inflation could spell trouble and it's something to watch closely in the weeks and months ahead.

The takeaway is that now remains a great time to consider a home purchase or refinance. Let me know if I can answer any questions at all for you or your clients.
 Real Estate Miscellaneous Stats

Extreme Eastside Market Demands Extreme Measures:  Any self respecting Real Estate professional would not typically recommend their buyers to waive inspections, to not bother making an offer on a home unless the are willing to exceed their price range, write cheesy motivation letters to the seller, or ( gasp ) ignore the appraised value. For buyers to compete in the Bellevue, and some other Eastside, markets; that is exactly what it can take to win against highly motivated offers. Forget that, in spite of going to crazy measures, your offer may be blown out of the water by a cash offer that can close in days. In the first 3 months of this year, 39% of all Eastside sales were cash. Data and anecdotal stories describe very difficult circumstances for buyers in these markets. Even the lower appreciation rates this year compared to ’13 can mean a big pricing increase in actual dollars. Eastside prices in April were up 7.2% from one year ago. As recently as February 2012 the median value was $362k. Currently that number has risen to $535k. This is creating a sense of urgency on the part of buyers. For now interest rates have trended down but if that changes it will cause even more motivation. Agents relay that they have not seen many homes sell without a bidding war for months. Multiple offers of at least 15-20 are typical with some seeing many more. Bidding wars are pushing sales prices over $100k above listing price. Agents are having to add new skills to their repertoire to keep buyers engaged in the hunt under very discouraging circumstances. Contact me about options to put your buyers in a position to make a cash offer. 

Housing Recovery Reflected In Latest Builder Report:   Confidence among U.S. homebuilders rose in June by the most in almost a year, a sign the residential real estate market is stabilizing after reeling from severe winter weather earlier this year. The National Association of Home Builders/Wells Fargo sentiment gauge climbed to 49 this month from 45 in May, the biggest gain since July 2013, figures from the Washington-based group showed today. Readings greater than 50 mean more respondents report good market conditions. The median forecast in a Bloomberg survey called for 47.
Current sales, the outlook for future purchases and prospective buyer traffic all improved this month, this week’s figures showed, indicating mortgage rates close to historically low levels and a strengthening job market are sustaining demand.Improving sentiment comes as the world’s largest economy picks up this quarter following a contraction in the first three months of 2014. The increase "is a welcome sign and shows some renewed confidence in the industry," NAHB Chairman Kevin Kelly, a homebuilder and developer from Wilmington, Delaware, said in a statement. "However, builders are facing strong headwinds, including the limited availability of labor."
The gain this month in the index was the first this year. The measure of the six-month sales outlook improved to 59 in June from 56 which is the highest since January.
By region builder confidence improved in the Midwest, West and South.

Negative Equity Still A Major Factor Affecting Markets: A recently released report by Corelogic shows a much improving situation overall with more homeowners recovering usable equity in their homes. While over 300000 homeowners returned to positive equity in the first quarter, only one in five homeowners have sufficient equity to sell and purchase another home. Currently 12.7% of all homes with mortgages are underwater. That improved from the same time last year which was at 13.4%. At current appreciation rates another 1.2 million homes are expected to emerge from negative equity over the next year. Another interesting reading from their report is another 10 million homes have less than 20% equity. Most of the total equity is concentrated in the higher end part of the market. Washington ranked #30 out of all 50 states but about #30-#20 states all were at very similar levels. 

Hood Canal Real Estate, Mortgage, and Economy - www.hoodcanalliving.com