By: Fred Arnold
Housing continues to improve at a rate much faster than anyone expected. We are now fully into a seller’s market, and the seller’s know it. More and more properties are seeing multiple offers and buyers are a lot more willing to settle just to get into a home. (Hmm, doesn’t this sound similar to a real estate market back in the mid 2000’s?) Home prices are increasing at boom-time rates as the Case-Shiller Home Price Index reported an increase in values of 1.4% for the month of March.
Don’t miss a thing. Get breaking Santa Clarita news alerts delivered right to your inbox.
That is more than the 1.1% for the prior month. When you annualize the current home value increase on a national basis, we see that homes are rising at a minimum of 16.8% per year. The annualized increase on a national level is that home prices are 10.9% higher than they were a year ago. In certain areas of the country such as San Francisco, Phoenix and Las Vegas home prices are as much as 20% higher than a year ago.
Interest Rates Are Rising
The rapid increase in interest rates has definitely put the brakes on refinancing. Purchase applications on the other hand have increased by 3% despite the rising cost of borrowing. The belief is that home-buyers are realizing what is happening and they are jumping into the purchase market to get in before the cost of borrowing as well as home prices increase even more.
The reason rates have been rising is primarily based upon comments from the Fed that they may begin to slow down their purchase of bonds which is what has been keeping interest rates artificially low. Improvements in the economy and employment sector has the Fed talking about winding down their asset purchase program. This has bond investors spooked so they are starting to get out of the bond market, which drives bond yields higher.
Do you have a news tip? Call us at (661) 298-1220, or drop us a line at firstname.lastname@example.org.
On a side note I was reading an article the other day written by a mortgage professional who went as far as to blame Fed Chairman Bernanke for rising mortgage rates. The writer was upset that the Fed Chairman had the nerve to suggest that the Fed may need to begin to exit their economic stimulus participation because the economy is improving. (Wow 2013 did he really think interest rates would stay this low forever?) Hope is NOT a strategy here. The reality is that as rates rise, home prices rise, which of course means that equity builds as well. For the first time since the real estate crash, we are hearing first time home-buyers use the word “investment” when talking about buying a home which illustrates this point.
Economic reports for next week are:
Monday June 3rd 2013 ISM Manufacturing Index and Construction Spending
Wednesday June 5th – MBA Report, ADP Employment Report and Factory Orders
Thursday June 6th – First Time Jobless Claims
Friday June 7th 2013 National Unemployment
As your mortgage professional, I am happy to assist you with any information you may need regarding mortgage or real estate information. I welcome the opportunity to serve you in any way I possibly can, 661-505-4300.
Source: Santa Clarita News