30-Second Update:  Stock Market Volatility Pushes Mortgage Rates to 2-Month Low

Rates for home loans have tumbled for a third straight week, and now represent a 2-month low during the week of December 6th.  Freddie Mac’s Chief Economist Sam Khater said, “this week’s rate reaction to the volatile stock market is a welcome relief to prospective homebuyers who have recently experienced rising rates and rising home prices.”  For the week ending December 7th, the Dow 30 was down 559 points, or 2.2%, the S&P 500 was off by 63 (2.3%), and tech-heavy NASDAQ fared the worst of the lot, tumbling 219 points (3.1%).

This recent pullback in mortgage rates not only represents a reprieve for homeowners in the market to purchase, but also for homeowners looking to refinance or take cash-out of their current residence.  Amid the recent pullback in rates and volatility in the stock market, the Federal Reserve officials have continued their indication that their will be a December rate hike at its next meeting, taking place on December 18th and 19th.  In addition to the expected December hike, the Federal Open Market Committee is projecting three more hikes in 2019. 

Holiday Version: Did you know? 3.1% of the world’s children live in America, but they own 40% of the toys consumed globally!




30-Second Update - Fannie Mae and Freddie Mac Raise Conforming Loan Limits

For the third year in a row, the Federal Housing Finance Agency has raised the conforming loan limit for Fannie Mae and Freddie Mac in nearly every part of the U.S.  The three-year increase follows a ten-year period where the FHFA kept the conforming loan limit the same.   The decision to continuously raise loan limits over the past three years is a direct result of rising home values.  The FHFA’s third quarter 2018 House Price Index report, which estimates the increase in the average U.S. value for the last four quarters, showed that home prices increased 6.9% on average, between the third quarters of 2017 and 2018.  As a result, the maximum conforming loan limit will increase in 2019 by the same percentage, going up from $453,100 to $484,350

In addition, loan limits will also increase in “high cost areas”.  These are areas where 115% of the local median home value exceeds the baseline loan limit.  The new ceiling loan limit in these areas is calculated as 150% of the conforming loan limit, which comes to $726,375.  The previous high cost ceiling was $679,650.  

***The Federal Housing Administration (FHA) will set its own loan limits for 2019, but those numbers are still pending. 

Did You Know? According to a survey by the Census Bureau, an American will move 11.4 times, on average, during his or her lifetime. 


Housing Market Slows but Still Steady


The National Association of Home Builders (NAHB) released their Housing Market Index (HMI) for the month of November.  With this release, we see the number drop from 68 down to 60.  This number is the lowest in roughly two years, however it is still higher than its 30-year average of about 50.  The HMI is based on a monthly survey of NAHB members designed to gauge the single-family housing market.  The survey rates the sale of new homes at present time, the amount of sales in the next six months and new traffic of new home buyers.

The U.S. Census Bureau and the U.S. Department of Housing and Urban Development recently announced their construction data.  This report is broken down into the following:

Housing Starts – This measures the number of residential new construction projects that have “started” in the given month.  For this month’s report we see starts increase by 1.5% from September to October.

Building Permits – National permits to “break ground” dipped slightly by 0.6% from September to October.  A large drag on this number comes from the Midwest where permits are about 17% lower from this time last year.

Housing Completions – This measures the number of new homes that have been built and made ready to be occupied.  There were about 1.1 million privately-owned completions for the month of October, which is about 3.3% lower than September.  Single-family completions also dipped, but only by 1.2%. 

So what does this all mean?

There is a slight builder slowdown occurring, but housing is still pushing along and performing steadily.  With the seasons changing and demand lessoning, builders are slowing, but are still optimistic for the future.  This may be a great time to take advantage of a lull and invest in a property where you may be able to purchase at a discount.



30 Second Update:  Federal Reserve Leaves Rates Unchanged


The Federal Reserve, in its November meeting, has left their benchmark interest rates unchanged.  The Federal Open Market Committee, unanimously approved keeping the federal funds rate in a range of 2 percent to 2.25 percent. However, the Fed is expected to increase that range by a quarter percentage point at their next meeting taking place on December 18th and 19th. Many economists are also forecasting a quarter percentage rate hike in each quarter of 2019.  If that were to happen, the benchmark interest rate will reach 3 percent, which is the level the Fed regards as neutral.  Supporting their forecasts and rationale for raising rates, the U.S. Central Bank went on to say, “the labor market has continued to strengthen, and economic activity has been rising at a strong rate. 

Did you know?...

The Fed decides how much money should be printed annually. In 2010, $974 million was printed. In contrast, $30 billion of Monopoly board-game money is printed each year.



Home Prices On The Rise

According to CoreLogic’s reporting, home prices across the country increased by 5.6% since November of last year.  Just over the last month, home prices have also increased by 0.4%.  Forecasts are showing a dip in appreciation over the next month, but a rise by about 4.7% over the next year. 

By digging deeper into the CoreLogic report, we can see interesting statistics about millennials.  Millennials are those who were born within the years 1981 and 1996 and are part of the largest portion of consumers entering the housing market.  As per this report, we see that 80% of millennials will move in the next 4-5 years.  Also, 40% of millennials are seen as currently very interested in home ownership.  More than two thirds of millennials regularly monitor home values in their local markets.  Almost 75% of millennials are aware of affordability and see it as a barrier to entry into the housing market. The current average age of a first-time home buyer is 30 years old.

Frank Martell, President and CEO of CoreLogic recently said, “Our consumer research indicates younger millennials want to purchase homes, but the majority of them consider affordability a key obstacle.  Less than half of younger millennials who are currently renting feel confident they will qualify for a mortgage, especially in such a competitive environment.”

Another interesting fact is that millennials had a significantly higher average loan-to-value ratio than the rest of America’s homebuyers. According to Ellie Mae’s report, millennials were able to obtain a loan with an average loan to value (LTV) of 87% whereas all other borrowers’ average LTV was 79%.




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