Hood Canal Real Estate, Mortgage, and the Economy

Hood Canal Real Estate, Hood Canal Properties, Hood Canal Homes, Hood Canal Lots, http://www.hoodcanalliving.com

Interest Rates Move Off 18 Month Lows:  Interest Rates continue to move within a narrow range with 18 month low points at the bottom and about .125% higher at the top end. Rates have remained amazingly resilient in the face of some significant head winds that would normally move them higher. Rates usually move higher when stock markets move higher. That has not been the case recently. Stock market indexes continue to move higher and are not past historic levels. They are moving higher primarily due to a search for yield by investors all over the world. Stock and bond markets in most parts of the world are languishing under anemic economic conditions as compared with the US. This is causing money to move in to our markets which increases values. This is the same situation with bonds where yields in Europe are low as compared to their economic activity. This is causing money from international sources to buy our bonds which is keeping our interest rates low. This week rates moved higher after a jobs number came in very favorably. The economy continues to show signs of recovery even though it is not robust enough to address concerns of middle class wage earners. Inflation remains low, wages are moving slightly higher, US currency is getting stronger, oil prices are moving lower and consumer confidence is up. All of this exists while economies in Europe, Japan and China are slowing. This gives us a wonderful set of circumstances of low rates and growing economic activity and stock markets in the US. For now we do not see those circumstances changing.  

Industry News

"Start me up." The Rolling Stones. The labor sector has kicked into high gear, with job growth in November far exceeding expectations.
The November Jobs Report showed that 321,000 jobs were created, far above the 230,000 expected. In addition, 44,000 jobs were added to September's and October's figures. This report marks the tenth straight month of 200,000 plus job growth, which is the longest stretch since 1994.

Another positive in the report is that the Unemployment Rate held steady at 5.8 percent. However, there is one thing to watch in future months: Hourly Earnings came in double expectations. If future months show this is the start of a trend, inflation talk could heat up. Remember that inflation is bad for Bonds, as it reduces the value of fixed investments like Bonds. This means inflation can also cause home loan rates to worsen, as they are tied to Mortgage Bonds. But the main takeaway is that the labor market and overall economy continue to improve, and these improvements should provide a boost to the housing market.

Speaking of housing, research firm CoreLogic reported that home prices (including distressed sales) rose by 6.1 percent from October 2013 to October 2014. This is up from the 5.6 percent annual gain recorded in September, halting a seven-month slowdown. Home price gains are at more normal levels now, after the double digit gains seen earlier in the year.

Even though the strong Jobs Report caused volatility in the markets, home loan rates remain near some of their best levels of the year, and now is 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

Fannie Mae and Freddy Mac Help Relax Lending Standards: Fanny and Freddie both released new guidelines to lenders on Monday that are intended to clarify what will prevent loan files from being purchased by them. Conforming lenders must underwrite loans to Fannie and Freddy rules in order for them to be eligible for sale. Part of the process for lenders is to predict what will disqualify a loan and that has often been done with a very subjective call on certain borrower parameters. Uncertainty about the potential disqualifications cause many lenders to add ‘overlays’ on top of standard rules in order to prevent having files rejected by the GSE’s. The recent updates by Fannie and Freddy are intended to remove much of the uncertainty by lenders giving them more confidence to approve loans. This is causing a prediction that more borrowers will be approved for loans that have been declined up to this point. I am not sure how this will impact lenders, such as RPM, that are direct sellers and do not currently have overlays on certain products. The bottom line is there is a consensus that qualified borrower are being left out of the market because of poor guidelines and this is being addressed.
Luxury Home Market Strong in Seattle Area:  A recent report showed that sales of $1 million + homes shows Seattle in the top 10.  Much of that strength has come from foreign buyers and investors but data suggests that factor is waning as the sector continues to show strength. Seattle came in at #8 behind the usual high value California markets and Houston. Sales are up over 22% in this sector from last year averaging $1.55 million. All cash sales are plummeting as foreigner sales slow. The strength of this sector is a good sign that the growth is home grown and sustainable due to local economics.
Northwest MLS Report For October: The new report summarizing October activity shows year-over-year gains in new listings, pending sales, closed sales and prices.
Northwest MLS members reported pending sales last month up nearly 6.9 percent from twelve months ago.  New listings that are coming on the market are receiving a substantially higher than normal sales activity in many market areas. More central markets are still experiencing a large backlog of buyers looking for homes while some outlying markets have seen a slowdown in competition for listings.
Although the pace of sales has slowed somewhat since June, agent managers say demand is steady, with about half of all new listings selling in the first 30 days. Last month,   pending sales of single family homes and condominiums outpaced the number of new listings. A comparison of total inventory shows a drop of nearly 3.7 percent from a year ago. At month end there were 23,501 active listings across 21 counties in the MLS database. That's nearly 900 fewer listings than the year-ago total of 24,391.
Statewide inventory at the end of October stood at 3.24 months, a slight drop from the previous month's figure of 3.7 months. In King County there is less than two months of supply, well below the four-to-six month level that many industry analysts use as a gauge of a balanced market. An exception to that is Snohomish county which had gains in inventory. As the selection expands, buyers who have been on the sidelines are being lured back into the market, according to MLS director John Deely, principal managing broker at Coldwell Banker Bain in Seattle. Deely observed  sellers are now seeing brisk activity and even multiple offers after adjusting their prices after they had languished on the market. This suggests buyers have become more sensitive to price and are watching inventory closely.
Closed sales were over 7500 for October. Prices on those sales were up 7 percent, rising from an area-wide median price of $271,000 to $290,000. Four counties reported double-digit price hikes, led by San Juan County, where prices jumped 18.4 percent, and Snohomish County, with a 17.4 percent year-over-year gain.
Brokers consensus is it is vital to property price listings under current conditions where buyer’s have been wary of recent price increases. Many buyers have to be selective and not enter in to bidding wars as student debt and down payment hurdles cap their ability to compete. Attention on listings suggests buyers are watching for level of interest before making offers hoping to stay out of competitive situations. This often does not work as others seem to do the same thing.
Northwest MLS brokers also commented on distressed sales and upticks in remodeling and new construction.
Local brokers point to the promise of increases in new construction by local builders, a positive economic forecast for the region, and more homeowners surfacing from being "under water" and now able to sell due to increase in appreciation. This creates conditions for 2015  gearing up to be as active if not more so than 2014.
Corelogic Report Shows National Strength For October:  Corelogic recent report shows many markets are approaching their historic highs with nine states actually exceeding historic highs. This makes for the 32nd consecutive month of price increases for the overall US. All states saw annual price increases but 27 are nearing full recovery defined as being within 10% of historic highs. Most of the 9 states exceeding their historic highs are in the middle of the country including Colorado, Wyoming, Louisiana, Nebraska, North Dakota, South Dakota, Tennessee, and Texas. Individual markets within states with strong recoveries were noted including Seattle. The report noted moderating price increases with most markets increasing at half their Spring 2014 pace.

Hood Canal Real Estate, Hood Canal Properties, Hood Canal Homes, Hood Canal Lots, http://www.hoodcanalliving.com