Despite their reputation as a generation of renters, the truth of the matter is that many Millennials are buying homes. And they’re not just buying, they’re buying smarter than a lot of people did in the past. To be sure, they seem to be taking longer than previous generations to buy their first home, but that’s not necessarily a bad thing — it often means they’re in a better financial position when they do. Here are 5 things we could all do well to understand before buying our first homes.
For professionals in the housing industry, from real-estate agents to loan officers, and everywhere in between, the more successful you become, the harder it can be to find time to take a vacation. But, you still really should. In April’s issue of Realtor Mag, Michelle Hoffman wrote a great article on how to plan (and take!) a vacation without your business suffering. If you haven’t gotten out of town yet this summer, then this article is a must-read. After all, what good is success if you can’t take any time off to enjoy it?
CNBC reported yesterday that mortgage application rates are basically unchanged at an increase of 0.1%, citing the Mortgage Bankers Association. However, hidden in that no-news number was a little bit of actual news, refinances were up substantially, with a week-over-week increase of 3%, contrasted with a 4% decline in purchase applications. Apparently the word on the financial street is that all of you buyers are waiting for news from the Fed, while the pros are trying to convince themselves that any Fed move has already been priced into the market.
A strong Employment Report, a real increase in hourly wages, and a low unemployment rate often collude to drive interest rates in a direction unfriendly to homebuyers or those with ARMs. The jobs report can have an immediate impact on your monthly mortgage payment. Financial markets prognosticators argue that economic forecasts are already “priced-in” to the markets well ahead of the actual report. In fact, the headline unemployment rate may not be as important as it once was, but today, with it at 5.3%, we should all get used to those higher monthly mortgage payments.
OK, maybe not all of them, because it does really seem that there’s a new entrant every day. Nevertheless, MarketWatch, with the help of Zillow, has put together a photo gallery and summary of at least 15 of them. Highlights include the Clinton’s four-bedroom, six-bathroom house in D.C., estimated at a current market value of $5.76 million, and Jeb Bush’s flat, valued at only $1.1 million — which seems a little low for a Bush residence to us. We’ll leave it to your imagination who has the largest current mortgage.
Higher home prices are making house flipping harder and riskier but more lucrative. Flipping, which is generally defined as buying and selling a home in the same calendar year, is actually down slightly this year, but year-over-year, it’s been fifty percent more profitable. Home flips made up just 4.5% of sales in the second quarter this year, according to RealtyTrac, down from 4.9 percent a year ago. Flipping returns (the gross return on investment), however, increased to nearly 36 percent, up from 24 percent one year ago.
The Mortgage Credit Availability Index (MCAI) tracks whether lending standards are tightening or loosening, and is benchmarked against 100 for March, 2012. For July, it hit 125.5, up 2.9% from May, and continuing an almost uniformly upward trend since that original benchmark to hit a new high. The MCAI is a composite of four sub-indeces: conventional, jumbo, government, and conforming. Conventional and jumbo saw the most loosening, up 5.2% and 4.7%, respectively. More details and explanation are available at the World Property Journal.
Over the past few months, this blog has reported a few times on the Consumer Financial Protection Bureau’s (CFPB) eClosing project. Yesterday, they released their first report on the project, and have concluded that electronic mortgage closings can benefit consumers. Specifically, they lead to better consumer understanding, a more efficient process, and a greater feeling of empowerment amongst consumers. There can be little doubt about these things, although there’s opportunity for problems — if people are overwhelmed with paperwork now, are they even going to read it when it’s electronic?
New statistics were out a few days ago, and have since been all over the news: U.S. homeownership is at a 48 year low. As of Q2 this year, it’s the lowest it’s been since 1967, and is approaching historic lows. The Knowledge@Wharton radio show recently featured Wharton adjunct real estate professor Sam Chandan discussing trends in U.S. homeownership and rental markets. Curiously, they start off from the perspective of “a continuing tight market for mortgages,” which seems in direct contrast to the reality of today’s mortgage market.
This blog just reported yesterday on the high non-mortgage debt that most Americans are carrying these days, seemingly led by auto-related debt. But while that may be true, it doesn’t seem to be keeping all of you from making your payments, which is great news for everyone! The 30-day mortgage delinquency rate fell to 4.82% in June, down 2.9% from May and 15.5% from a year earlier. Not only that, but foreclosure starts were also down: 3.5% month-over-month, and 10.5% year-over-year. All statistics from Mortgage Servicing News.