Realtor.com®: 'This Is No Housing Bubble!

DAILY REAL ESTATE NEWS | WEDNESDAY, APRIL 29, 2015

Home prices are rising at a more rapid pace than they were just a few months ago, as demand outpaces supply. Existing-home sales surged 9 percent year-over-year in March and home prices were up 8 percent over last year, according to the National Association of REALTORS®. What’s more, with tight inventories plaguing many markets, the median list price in March climbed 11 percent over last year, reaching $220,000, realtor.com® reports.

Existing-home sales report:Home Sales Surge to 18-Month High

With home prices heating up again, could the housing market be heading for another bubble?

“During the peak years of the housing bubble, from 2003 to 2005, the data on supply versus price appreciation looked very similar to what we are seeing now,” writes Jonathan Smoke, realtor.com®’s chief economist, in recent commentary at the site. “But there are key differences, which is why I’m confident that on the national level, this is no bubble.”

Smoke says these home price increases will stick because the market is correcting for severe price declines in the recent past. Prices rose 7 percent and 12 percent in 2012 and 2013, respectively. Median prices have climbed less than 8 percent on a compounded annual basis over the past three years. On the other hand, from 2002 to 2005, median prices rose 10 percent on a compounded annual basis – and had no justification of a bounce from a prior decline, Smoke says.

“On an inflation-adjusted basis, we are 30 percent beneath the peak set in 2005,” Smoke notes. What’s more, “relative to rents or incomes, median home prices are not ‘unhinged’ from long-term averages,” Smoke writes. In 2005, the price-to-rent ratio was 35 percent higher. Currently, the price-to-income ratio is where it was in 2001 and it is about 30 percent below where it was in 2005.

Smoke also notes that during the housing bubble, mortgage financing saw rapid expansion, and flipping activity based on speculative investing soared—neither of which are occurring now.

“Today’s higher prices are only to be expected as the economy improves and first-time buyers gradually return to the market,” Smoke writes. “Eventually, those higher prices should encourage more owners to list their homes and builders to start construction on new housing—which in turn should solve the problem of supply.”

Source: “Home Prices Are Climbing Faster and Faster, but This Is Not a Bubble,” realtor.com® (April 24, 2015)

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Home Buyers Push Up Loan Demand!

DAILY REAL ESTATE NEWS | WEDNESDAY, APRIL 22, 2015

Mortgage applications were on the rise last week, as home buyers remain behind the upswing in demand. The Mortgage Bankers Association reported that applications for home purchases, viewed as a leading indicator of future home sales, rose 5 percent week-over-week on a seasonally adjusted basis for the week ending April 17.

Applications for home purchases are now 16 percent higher than the same week one year ago.

"Purchase applications increased for the fourth time in five weeks as we proceed further into the spring homebuying season," says Mike Fratantoni, chief economist for the MBA. "Applications for FHA purchase loans remained strong as well."

Overall, MBA's mortgage application index, which reflects combined applications for refinances and home purchases, rose 2.3 percent last week. Applications for refinances increased only 1 percent last week but remain up 41 percent from a year ago due to lower mortgage rates. A year ago at this time, the 30-year fixed-rate mortgage was significantly higher, averaging around 4.25 percent.

The average 30-year fixed-rate mortgage has mostly hovered around historical lows for the past few weeks. Last week, it dropped slightly to 3.83 percent, its lowest level since January, MBA reports.

Source: “Mortgage Applications Rise 2.3%, Led by Homebuyers,” CNBC.com (April 22, 2015)

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Robert De La Rosa
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Loan Demand Is on the Upswing for Spring!

DAILY REAL ESTATE NEWS | WEDNESDAY, APRIL 01, 2015

Mortgage applications for home purchases and refinancings continue to rebound, with volume rising 4.6 percent on a seasonally adjusted basis last week compared to the week prior, the Mortgage Bankers Association reports in its latest index reading for the week ending March 27.

“This week’s mortgage application survey falls right into line with recent indications that home sales – new, existing, and pending – are on the rise, as is consumer sentiment,” says Lynn Fisher, the MBA’s vice president of research and economics.

Broken out, loan applications for home purchases, viewed as a gauge of future home sales, increased 6 percent week over week. Purchase applications are 8 percent higher than year-ago levels. Refinancing applications increased 4 percent during the week. Refinancing applications are 44 percent higher than they were a year ago, according to the MBA.

Federal Housing Administration loans, a big draw to first-time buyers, and Veterans Administration loans continue to post a strong performance with volume of these government-insured loans growing by 19 percent compared to last year.

The average 30-year fixed-rate mortgage fell to 3.89 percent last week, from 3.90 percent the week prior, the MBA reports.

Source: “Mortgage Applications Surge on Spring Demand,” CNBC (April 1, 2015)

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Robert De La Rosa
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Solar Panels Can be a Deal Killer!

DAILY REAL ESTATE NEWS | MONDAY, MARCH 23, 2015

Studies have suggested that the addition of solar panels on a home can boost a home's value. But sometimes those solar panels can sabotage a deal when it comes time to sell.

Selling Green Homes

Making the Case for Energy-Efficient Homes

Energy-Efficient Mortgages Gain Popularity

More Builders Find the Sun Is a Selling Point

Do Green Homes Fetch Higher Sales Prices?

More companies are offering home owners a contract to lease solar panels where they pay no upfront costs for the installation and could start saving on their electricity bills right away. But home owners who sign onto these deals are finding some snags when they go to sell.

Potential buyers are leery of taking on the leasing payment contracts for the next 15 to 17 years because they often have to qualify on credit from the solar companies themselves. Also, some buyers are hesitant to sign a contract because they're concerned the solar equipment will become obsolete or won't amount in a big savings in the end after paying the leasing fee.

Some home buyers are refusing to buy the house unless the seller buys out of the remaining lease payment stream -- which could be $15,000 or more.

For example, a Fresno, Calif., couple trying to sell their house told The Los Angeles Times that it attracted multiple offers but two sets of buyers backed out of the contracts due to the leased solar panels on their roof. The buyers felt the long-term cost of the lease agreement was too high or they were concerned about the credit qualifications they had to meet in order to take over the lease. Ultimately, the couple had to pay $22,000 to break the lease with the solar company so that they could sell the house.

With the rising popularity of solar, Lynn Farris, a real estate professional in Windermere Hulsey & Associates in Vacaville, Calif., says she's already seen several disputes arise over solar panel leases, and she expects the problem to get worse.

After all, residential solar installations are rising dramatically -- up by 50 percent per year since 2012, according to the Solar Energy Industries Association.

Source: "Leased Solar Panels Can Complicate – or Kill – a Home Sale," The Los Angeles Times (March 22, 2015)

An Expert In Your Court
Robert De La Rosa
"CALL NOW 909.271.5640"
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www.TheCaliforniaPropertyConnection.biz 

Coldwell Banker Town & Country
501 W Redlands Blvd
Redlands CA, 92373

CalBre 01435824

Mortgage Rate Fluctuations Have Big Impact! www.TheCaliforniaPropertyConnection.biz

DAILY REAL ESTATE NEWS | THURSDAY, MARCH 12, 2015

Even the slightest movement in mortgage rates can translate into more – or less – purchasing power for your clients.

Read more: Mortgage Rates Drop, Near 2013 Lows

John Burns Real Estate Consulting recently looked at how the fluctuation in rates effects the average consumer. The firm found that a typical family earning $60,000 a year could afford around $1,800 month for the mortgage payment.

In 2000, a 30-year fixed-rate loan, which averaged an 8 percent mortgage rate, would have qualified that family for a $245,000 loan.

But at a 4 percent mortgage rate – which current rates are averaging – that same family can qualify for a $377,000 loan.

"In other words, each 1 percent drop in interest rates in the last 15 years has allowed home sellers to raise the price 12 percent," according to Jon Burns Real Estate Consulting’s analysis.

Source: "How Tiny Mortgage Rate Moves Can Buy You a Lot," CNBC (March 10, 2015)

An Expert In Your Court
Robert De La Rosa
"CALL NOW 909.271.5640"
"Get Qualified Now By A Loan Professional" 

www.TheCaliforniaPropertyConnection.biz 

Coldwell Banker Town & Country
501 W Redlands Blvd
Redlands CA, 92373

CalBre 01435824