Low Mortgage Rates: Time Is Running Out – Looming FED Rate Hikes

It’s time to reaffirm some advice. That’s because on Wednesday we heard from the ultimate authority on interest rates in the U.S.: the Federal Reserve.

Now, technically, the Fed does not set mortgage rates—but that’s probably what most people believe, given the amount of news and hype surrounding its decisions.

The way it really works: The Federal Reserve sets the short-term rate policy, which governs what banks charge one another for short-term loans. Short-term rates are different from long-term rates, but they typically move in similar ways in times of change.

Longer-term rates usually move before the Fed acts. Mortgage rates, in particular, usually track to long-term bond rates like the 10-year U.S. Treasury note. Since the surprise outcome of the presidential election, mortgage rates have risen close to 60 basis points—more than twice the quarter-point increase that the Fed did on Wednesday. (One basis point is 0.01%.)

Even before the election, evidence was stacking up that the economy was picking up momentum. Now the financial markets are betting that inflation will be higher under the Trump administration’s fiscal policies. But the data-driven Fed hasn’t seen the inflation evidence that would justify a greater increase in short-term rates yet.

Emphasis on “yet.”

If you want to understand how the Fed affects mortgage rates, pay more attention to what the central bank says about the future rather than the policy rate changes it has already enacted.

The Fed expects the economy to hit its target level of inflation next year. As a result, it also expects to raise short-term rates three times, by a total of 75 basis points. In reality, rate moves could be less—but they also could be more.

That means rates like we’ve seen for most of the past five years are indeed history.

Hate those annoying radio ads screaming about refinancing while rates are in the 3% range? Well, relax. They’re history, too.

Mortgage rates will move higher before the Fed acts again, so if the Fed carries out its three planned hikes in 2017, we could come close to 5% on 30-year conforming rates before the end of next year. This is more than I have been expecting even as recently as last month.  My, how quickly things have changed.

It’s time for a bit of harsh reality: The move toward 5% will not likely be smooth, gradual, or immediate. Instead, rates will likely jump in intervals, based on whatever new positive economic data emerge and also when we see actions from the new Trump administration on fiscal policy.

Since mortgage rates have already gone up more than the Fed’s increase, they will likely stay in this range for the next two months or so. That means we may see some day-to-day volatility but little consistent movement up from where rates ended on Wednesday (the average 30-year conforming rate was just under 4.2%).

But as the year progresses, rates are more likely to move. Mortgage rates are most likely to move in the month ahead of each key Fed policy meeting. The most important meetings are in March, June, September, and December—so home buyers, mark your calendars!

If you intend to buy this year and finance the purchase with a mortgage, acting sooner rather than later will cost you less.

On a typical median-price home with 20% down, the monthly principal and interest payment would be $978 at a rate of 4.2%. That same home at 4.5% would cost $35 more per month. If we reach 5%, that monthly payment goes up to $1,074, or almost $100 more per month than where it is now.

Source: Realtor.com

 

Florida Realtors Sees Positive Trends in Today’s Housing Market

WASHINGTON – Dec. 2, 2016 – What fall slowdown? In many markets across the country, the housing market is showing anything but the typical seasonal slowdown. In fact, a report released by the National Association of Realtors® (NAR) finds just the opposite.

Existing-home sales eclipsed June’s cyclical sales and, in October, zoomed to the highest annualized pace in nearly a decade, according to NAR. All major regions saw an increase in sales last month as well.

It’s a good time to be in the real estate business. And NAR says that Realtors have a lot to be thankful for this holiday season:

The Economy is Improving

In 2017, the economy is expected to continue growing, at least at a moderate pace, next year, and growth will lead to even lower unemployment, which can help boost consumer confidence. What’s more, a growth in jobs often translates into more households looking for homes.

Powerful Buying Forces Emerge

Two major demographic shifts at play in the current housing market could profoundly drive sales in the coming years: millennials and retiring baby boomers.

We are now in the midst of two massive demographic waves that will power above-average demand for homes for at least the next 10 years,” says Jonathan Smoke, realtor.com’s chief economist. The median age of a first-time buyer this year was 32, according to NAR’s 2016 Home Buyer and Seller Report. Next year, 4.4 million people in the U.S. will turn age 32.

Further, the nation’s second-largest generation, the boomers, is now moving into retirement. Americans age 65 to 74 are in a key age range where housing decisions are being made, which typically involve a home sale and a purchase. Over the next five years, the number of people in the U.S. over the age of 65 is expected to increase 18 percent as the population overall grows only 4 percent.

Foreclosures are Plummeting

The foreclosure inventory fell 31 percent in September and completed foreclosures dropped 7 percent year over year, according to data from CoreLogic. What’s more, the number of seriously delinquent mortgages (ones 90 days or more past due, including loans in foreclosure or REO) dropped by 25 percent in September year-to-year to the lowest level since August 2007.

Completed foreclosures have fallen by a total of more than 100,000 homes during the 12 months prior to September 2016, says Anand Nallathambi, president and CEO of CoreLogic. “The decline in foreclosures is one of the drivers in the drop in vacancies, which is positive for homeowners and communities. Heading into 2017 we see that prices, performance and production – the three most important drivers of the real estate market – are all improving.”

More New Homes are in the Pipeline

Housing starts rose 25.5 percent in October, reaching a seasonally adjusted annual rate of 1.3 million, the Commerce Department reported. It’s the highest pace since August 2007. Single-family housing starts reached a nine-year high in October, reaching a rate of 869,000.

These robust figures correlate with strong builder optimism in the housing market,” says Ed Brady, chairman of the National Association of Home Builders. ” A firming job market, a growing economy and rising household formations will keep the housing recovery on track into next year.”

Drones are Flying

Long-awaited guidelines were released in June that allow more real estate professionals to incorporate drones into their marketing, and they’re capturing aerial pictures and videos of properties to lure buyers.

The Federal Aviation Administration released its final rule on commercial drone use in June, though guidelines must be followed: Operators are required to obtain a Part 107 certificate, which replaced the previous Section 333 waiver. Operators also no longer are required to hold a pilot’s license. Still, operators must take a test before flying, and they must retake that test every 24 months in order to operate drones. Also, there are restrictions on the number of activities you can do with a drone (such as FAA prohibitions against flying a drone over a person or flying at night).

“Businesses are more and more finding opportunities to utilize drones as a way of cutting costs and better serving customers,” says Tom Salomone, NAR’s immediate past president. “That’s true in real estate and other industries as well. As application of this technology picks up, the regulatory landscape will likely continue to evolve.”

Source: Florida Realtors

 

New Development Added – PARAMOUNT Miami Worldcenter

An exciPARAMOUNT Miami Worldcenterting new development going up in the Miami skyline. Dubbed a “city within a city”, the impressive new PARAMOUNT Miami Worldcenter tower is a truly exceptional property.

“A signature residential tower that rises above what will be the ultimate shopping, dining and entertainment destination in Miami. It is above and beyond, when it is a PARAMOUNT.

PARAMOUNT Miami Worldcenter

Designed to maximize your experience and views, this 700-foot tower reaches far into the Miami skyline so that the world can admire your address, and your views are without boundaries. PARAMOUNT Miami Worldcenter is truly exceptional with a private pool deck, park, tennis courts and even indoor regulation soccer field on the Upper Deck of the mall (now called your backyard).

PARAMOUNT Miami Worldcenter

But move to the rooftop of your residential tower and you will discover the Skyview Deck and Lounge. An even more exclusive residential lounge and plunge pool oasis that was designed like a super yacht and guarantees all residents get to live in the penthouse. As you get to know this great tower, you will hear things like “outdoor living rooms” or “perfected kitchens”. What you really need to know is that your life, style and desires are one when entrusted to this address that could only be called PARAMOUNT.”

For more information, visit the PARAMOUNT Miami Worldcenter page on my website.

Fort Lauderdale to Consider 456 Residential Units Downtown

The Las Olas Co. has proposed building 456 residential units in two buildings along Federal Highway in downtown Fort Lauderdale, but the site would likely be sold to another developer.

The city’s Development Review Committee will meet on Oct. 25 to consider the site plan for the projects at 116 and 200 S. Federal Highway. The applicant is Las Olas Co., a longtime local developer led by President Michael Weymouth that has owned the land for more than three decades. A spokesperson for the company said the real estate would be sold to another developer for the projects.

The application lists the builder of the project as Orlando-based apartment developer ZOM USA. An official at ZOM USA couldn’t immediately be reached for comment. It was designed by architect CallisonRTKL with Architectural Alliance Landscape.

The overall project would be called Las Olas Walk. It would be north of Las Olas Boulevard, home to many restaurants, retailers, office buildings and residential towers.

The larger building would have 329 residential units at the northeast corner of Federal Highway and Southeast 2nd Street, where Las Olas Co. owns about 2.09 acres. The furniture store built in 1950 would be demolished. The new 8-story building would total 385,076 square feet, including 319,342 square feet of residential. It would include a pool on the ground floor.

The 1.38-acre site at the southeast corner of Federal Highway and Southeast 2nd Street would have 127 residential units and a 656-space parking garage. The 8-story building would total 342,567 square feet, with 128,721 square feet of that dedicated to residential space. The units would range from efficiency sized to three bedrooms. There would be an amenity terrace on the top floor. Residential units line the perimeter of the garage to improve its appearance from the street level.

Source: South Florida Business Journal

Scaled Back Galleria Mall Re-design Project Still Large at $750 Million

Keystone-Florida Property Holding Corp. has further scaled back its redevelopment plans for the Galleria mall in Fort Lauderdale, but it would still be a large project valued at more than $750 million.

On Oct. 19, the city’s Planning and Zoning Board will consider the application for Live Galleria, a rezoning of the 35-acre site at 2414 E. Sunrise Blvd. The new buildings would be built on the surface parking lots around the existing mall.

The developer has proposed 1,250 residential units, 47,251 square feet of new retail space, 18,700 square feet of new restaurants, 12,362 square feet of community event facilities and eight acres of open community space. The developer would build parking garages to replace the surface lots, leading to 1,360 new spaces.

By comparison, the original Galleria redevelopment plan had 1,640 residential units, a hotel, significantly more retail space, and office space. The revamped proposal has no hotel or offices.

The tallest building in the new proposal would be 285 feet. It would have seven new buildings, with all of them containing some residential, including three towers, built in three phases.

The designers of the Live Galleria are Adache Group Architects, TBG Partners, and Perkins + Will. The developers are represented by attorney Stephen Tillbrook of GrayRobinson and Courtney Crush of Crush Law.

“We have listened carefully to the community’s input and have revised the original redevelopment plan for Live Galleria several times accordingly,” said Peter Flotz, managing member of FLL Development Enterprise, one of the developers. “In its current form, the proposed plan will deliver an innovative, walkable, environmentally-friendly and interactive community which will transform the existing Galleria mall and be an asset to Fort Lauderdale.”

Many traditional malls around the country have been exploring ways to maximize their real estate as retailers deal with competition from online retailers and more entertainment-oriented destinations.

Live Galleria could generate more retail traffic by building residential on the property. It also aims to invite the public in with more pedestrian space, such as a linear park looping around the property, outdoor fitness equipment, a yoga area, a dog park, two welcome plazas, and a rooftop garden.

Keystone would also fund $24.1 million in multi-modal improvements to deal with traffic, such as redesigned streets, improved signal timing, turn lane enhancements, better pedestrian paths, new bicycle parking stations, and new bus shelters.

Once the three-phase project is completed in 2015, it would generate 476 a.m.trips and 697 p.m. trips, according to the developer’s traffic study.

Source: South Florida Business Journal

New Home Sales Numbers Are In: July SOARS to 8 Year High

A recent new home sales report for July showed that sales of newly built homes increased 12.4 percent since June, and rose 31.3 percent year-over-year. This surge marks the highest point in almost eight years.

“New homes are being purchased at a furious pace, and it could give the housing market the added push it’s been waiting for,” says Quicken Loans vice president Bill Banfield. “With more new homes purchased by move-up buyers, it provides an increase in housing choice for first time buyers looking for their starter house.”

Data released found that the new home sales seasonally adjusted annualized rate for July was 654,000, the highest pace of sales since October 2007. Actual new homes sold so far this year are up 13 percent over the first seven months of 2015. This July’s new home supply remains tight at 4.3 months of supply.

The median sales price of new houses sold in July 2016 was $294,600; the average sales price was $355,800. The seasonally adjusted estimate of new houses for sale at the end of July was 233,000. This represents a supply of 4.3 months at the current sales rate.

“It’s great to see evidence of much-needed growth and a shift toward more affordable prices in July’s report,” says realtor.com Chief Economist Jonathan Smoke. “It’s also good news that we are finally seeing builders shifting toward more affordable price points. And given the limited number of homes currently for sale, we can be confident that the decline in new home prices is a result of market shift and not discounting by builders.”

Source: RISMedia

August Scorches the Market Most in a Decade Says Realtor.com

A record-breaking summer for the residential real estate market continued in August, according to new monthly data on for-sale housing inventory and demand on Realtor.com®. Homes for sale on the site in August are moving two percent more quickly than last year as prices continue to reach new record highs.

“Summer 2017 was one of most competitive buying seasons that we have ever witnessed, fueled by historically low mortgage rates and inventory shortages that resulted in record-high prices, said Jonathan Smoke, chief economist for Realtor.com. “With the school year starting now in most of the country, we’re seeing some drop-off in demand, which may provide some relief for buyers weary from battling it out against other buyers all summer.”

The median age of for-sale listings on Realtor.com in August is expected to be 72 days, which indicates properties are selling two days faster than this time last year but four days slower than last month. In August most markets begin to slow down in response to the start of the school year, with inventory levels and market velocity moving away from peaks and sales beginning to decline.

The median home was listed for $250,000, eight percent higher than one year ago and virtually the same as last month. That extends this summer’s trend of record high prices and is a new peak for August.

For-sale housing inventory reached its apex last month and August now reflects the usual seasonal shift with the first monthly decline since January. Even with an estimated 475,000 new listings coming onto the market in August, the total inventory remains considerably lower than one year ago.

The median age of inventory in August is expected to be 72 days, down three percent from last year and up six percent from last month. The median listing price for August should reach a record high of $250,000, an eight percent increase year-over-year and flat compared to July.

The listing inventory in August should show a one percent decrease from July. Additionally, inventory should still show a decrease of eight percent year-over-year.

Realtor.com’s Hottest Markets received from 1.4 to 4.5 times the number of views per listing compared to the national average. In terms of supply, these markets saw inventory move from 21 to 39 days more quickly than the rest of the U.S. The hottest markets saw inventory movement slow down slightly as the median age increased by two days on average from July.

RDC_Hotness_Index_Aug

Key Takeaways from Realtor.com’s® August Hotness Index

California again dominated the list with 11 markets, but seven other states were represented (Texas, Colorado, Indiana, Ohio, Michigan, Washington and Tennessee).

  • Vallejo-Fairfield, Calif., continues its streak of 4 straight months atop the hottest markets.
  • The new entrants to the top 20 in August were Kennewick-Richland, Wash. and Waco, Texas.
  • The biggest gainer beyond the new entrants was Detroit, which moved up four spots and into the top ten.

Source: Realtor.com

Florida Realtors Assoc. Releases 2Q Wrap Up Data

ORLANDO, Fla. – Aug. 10, 2016 – Florida’s housing market reported more new listings, higher median prices and fewer days to a sales contract during the second quarter of 2016, according to the latest housing data released by Florida Realtors®. Closed sales of single-family homes statewide totaled 76,748 in 2Q 2016, up 1.4 percent over the 2Q 2015 figure.

“In the second quarter of 2016, Florida continued to add new jobs, which attracts new residents, encourages economic growth and strengthens the housing market,” says 2016 Florida Realtors President Matey H. Veissi. “Traditional housing sales increased statewide over the three-month period, while sales of distressed properties continued to decline. In another positive sign, new listings for single-family homes over the three-month-period rose 2.9 percent year-over-year, while new condo-townhouse listings rose 3.3 percent.”

The statewide median sales price for single-family existing homes in 2Q 2016 was $220,000, up 10 percent from the same time a year ago, according to data from Florida Realtors research department in partnership with local Realtor boards/associations. The statewide median price for condo-townhouse properties during the quarter was $163,000, up 5.2 percent over the year-ago figure. The median is the midpoint; half the homes sold for more, half for less.

Looking at Florida’s condo-townhouse market, statewide closed sales totaled 31,699 during 2Q 2016, down 2.7 percent compared to 2Q 2015. The closed sales data reflected fewer short sales – and rising traditional sales – over the three-month period: Short sales for condo-townhouse properties declined 42.2 percent while short sales for single-family homes dropped 36.7 percent. Meanwhile, traditional sales for condo-townhouse units rose 6.9 percent and traditional sales for single-family homes increased 14.4 percent year-over-year. Closed sales typically occur 30 to 90 days after sales contracts are written.

“Existing home sale prices throughout most of Florida’s metro areas are continuing to exhibit robust year-over-year growth,” says Florida Realtors Chief Economist Dr. Brad O’Connor. “This growth is attributable to simple economics, which is to say that demand is strong and supply is currently limited. The inventory of homes for sale at the more affordable end of the price spectrum – which includes the vast majority of distressed properties – continues to decline significantly, and new construction has not come close to making up the difference.”

In 2Q 2016, the median time to a contract (the midpoint of the number of days it took for a property to receive a sales contract during that time) was 42 days for single-family homes and 50 days for condo-townhouse properties.

Inventory was at a 4.3-months’ supply in the second quarter for single-family homes and at a 6-months’ supply for condo-townhouse properties, according to Florida Realtors.

According to Freddie Mac, the interest rate for a 30-year fixed-rate mortgage averaged 3.59 percent for 2Q 2016, significantly lower than the 3.96 percent average recorded during the same quarter a year earlier.

Source: Florida Realtors

A Tale of Two Cities: Broward County Steady, While Miami Struggles

The first half of 2016 has been a regular slugfest for Miami’s housing market, but the grass seems a bit greener for its neighbor to the north.

While sales in Miami-Dade continue their downward slope, Broward County saw a moderate uptick for both closed sales and prices during June, according to a new report from the Greater Fort Lauderdale Realtors association.

A total of 1,635 condos and townhomes were sold in Broward last month, marking a 4.4 percent jump in closed deals year-over-year. Single-family homes saw a slightly higher 4.8 percent jump in sales, coming out to 1,805 properties sold.

Although the numbers are by no means earth shattering, they’re a far cry from the market woes in Miami and Miami Beach. A second quarter report from brokerage Douglas Elliman showed sales fell as much as 24 percent, year-over-year in certain areas, signaling a market correction could be on its way.

Back in Broward, housing prices continued their steady rise during June. The median price for condos and townhouses hit $149,250 last month, spiking by 10.4 percent year-over-year. Single-family homes had a more moderate price increase of 7.3 percent, standing at a median of $325,000 in June.

And the inventory pile-up that’s slowing down Miami-Dade was nowhere to be seen in Broward. Active inventory for single-family homes fell 10 percent to 5,490 properties in June, while condos saw a slight inventory uptick of 1.8 percent to 8,641 units. The past 12 months have been a constant squeeze on single-family housing inventory, according to the association, while new condos entering the market are starting to level out year-over-year after a significant influx that started in February.

While both sectors of the market grew during June, the association’s figures show Broward’s true strength is in its single-family homes. Dollar volume for home sales hit $682 million in June, more than double that of condo’s $307.8 million. And for the past 12 months, year-over-year home sales haven’t fallen once — something Broward’s more volatile condo market can’t boast.

Source: The Real Deal

Top Buyers of U.S. Real Estate are Chinese for 4th Year

Chinese buyers were the top foreign purchasers of U.S. real estate for the fourth year in a row, a survey released Wednesday showed.

The National Association of Realtors reported that Chinese buyers bought 29,195 properties worth $27.3 billion in the 12 months ending March 2016. At a median price of $542,084, the typical Chinese purchase was more than double the median U.S. existing-home price of $223,058, showing that the acquisitions were made by the burgeoning Chinese elite.

Chinese purchases were more than triple that of the number-two nation, Canada, which had $8.9 billion of U.S. properties. India ranked third with $6.1 billion of purchases, and Mexico fourth at $4.8 billion.

That said, foreign purchases of U.S. real estate actually declined slightly, by 1.3% to $102.6 billion of residential property. The NAR said that decline came due to a stronger U.S. dollar and a weak global economy, as well as rising U.S. house prices.

Even the Chinese purchases fell, by 4.5%.

Lawrence Yun, chief economist of the NAR, said British purchases may subside after the vote to leave the European Union, which has sent the pound GBPUSD, -0.9906% down sharply. Britain accounted for $5.5 billion worth of purchases in this survey, ranking fifth-highest.

Latin Americans, Europeans and Canadians mostly sought properties in Florida and Arizona. California and New York drew the most Asian buyers, the NAR said.

Source: Marketwatch