Ugly But Honest News 5-18-2017

Real estate housing and economic news round up for May 18 2017

Talking about mortgage rates, economic confidence, homes getting smaller and much more!

 

Mortgage Rates Edge Down

 

Freddie Mac mortgage rates chart May 18 2017

 

  • 30-year fixed-rate mortgages averaged 4.02% with an average 0.5 point

  • This is down from last week when it averaged 4.05%

  • Last year at this time, 30-year fixed-rate mortgages averaged 3.58%

  • 15-year fixed-rate mortgages averaged 3.27% with an average 0.5 point

  • This is down from last week when it averaged 3.29%

  • Last year at this time, 15-year fixed-rate mortgages averaged 2.81%

 

 

Americans’ Confidence in Economy at Post-Election Low

 

Americans’ confidence in the economy has slipped over the past two months but remains higher than it was before the 2016 presidential election. Gallup’s U.S. Economic Confidence Index averaged +2 for the week ending May 14 — its lowest score recorded this year. This score is essentially unchanged from the +3 recorded the week before, but it is down considerably from the index’s high point of +16 in early March as the stock market hit record highs.

 

Oh boy. I wonder what will happen to economic confidence with all the drama happening in DC?

 

 

New Single-Family Home Size Continues to Trend Down

 

After increasing and leveling off in recent years, new single-family home size continued along a general trend of decreasing size during the start of 2017. This change marks a reversal of the trend that had been in place as builders focused on the higher end of the market during the recovery. As the entry-level market expands, including growth for townhouses, typical new home size is expected to decline.

 

According to first quarter 2017 data from the Census Quarterly Starts and Completions by Purpose and Design and NAHB analysis, median single-family square floor area was slightly lower at 2,389 square feet. Average (mean) square footage for new single-family homes declined to 2,628 square feet.

 

The bigger your home, the more you have to pay to heat and cool it. And ore to keep clean. And you will find an endless list of things that cost more when you have a larger house.

 

Remember, it is a matter of your tastes, budget and lifestyle as to what size home is best for you.

 

 

Housing Regulator Is Pushed to Crack Down on Sales of Foreclosed Properties

 

Lawmakers are pressing the nation’s housing regulator over the sale of thousands of foreclosed houses to investment firms that have pitched the promise of homeownership to people unable to get a traditional mortgage.

 

Some local authorities and regulators are taking legal action against several of these firms, accusing them of engaging in predatory business practices by reselling these often rundown houses “as is” through rent-to-own and other seller-financed transactions, sometimes known as contracts for deed.

 

I hate the scum that prey on people that just want to own a home. Please read You Must Crawl Before You Walk

 

 

Confronting the Affordable Housing Gap

 

The concern voiced so often today about housing affordability reflects a sobering truth: Rents are rising more quickly than wages—and most new houses and apartments are priced such that only the wealthiest people can afford to live in them.

 

The latest spike in housing prices is just the most recent indication that the shortage of affordable housing has been building for decades. Building more new homes will be part of the solution, but will require much more complicated negotiations over how and where those homes are built. Most developers no longer have easy access to greenfields in unincorporated areas where they can build. New construction now involves long conversations—over issues ranging from zoning and schools to gentrification—that add time and expense to the development process.

 

Very true and there is no doubt that where to build new homes is a problem in many areas. As is the extremely high cost of regulations that hurt the affordability of new homes.

 

 

Highlights From Ellie Mae’s Origination Insight Report for April 2017

 

Closing time for all loans decreased from 43 days in March to 42 days in April. Time to close refinances decreased to 41 days in April from 43 days the month prior, and time to close a purchase decreased from 43 days in March to 42 days in April.

 

The average 30-year rate for all loans increased to 4.41 in April, up from 4.39 in March.

 

Closing rates for all loans was 69.4 percent in April, up from 67.9 percent the month prior. Closing rates on refis decreased to 63.5 percent in the month, and closing rates on purchases decreased to 74.5 percent.

 

69 percent of all closed loans had FICO scores over 700. 70 percent of purchase loans had FICO scores over 700. 65 percent of refinances had FICO scores over 700.

 

The average FICO score on all closed loans increased slightly to 722 in April, up from 721 in March.

 

 

Household Debt Surpasses Previous Peak

 

From the NY Fed’s Quarterly Report on Household Debt and Credit:

 

Aggregate household debt balances increased in the first quarter of 2017, for the 11th consecutive quarter, finally surpassing the 2008Q3 peak of $12.68 trillion. As of March 31, 2017, total household indebtedness was $12.73 trillion, a $149 billion (1.2%) increase from the fourth quarter of 2016. Overall household debt is now 14.1% above the 2013Q2 trough.

 

Mortgage balances, the largest component of household debt, increased again during the first quarter. Mortgage balances shown on consumer credit reports on March 31 stood at $8.63 trillion, an increase of $147 billion from the fourth quarter of 2016. Balances on home equity lines of credit (HELOC) declined by $17 billion and now stand at $456 billion.

 

Is this increase due to a combination of higher home prices and mortgage debt being the largest part of household debt?

 

 

U.S. Economy Seen Less Likely to Grow 3% This Year

 

The probability that the U.S. economy will grow 3 percent this year has fallen over the last month as weak data and political concerns have dented confidence, according to a slim majority of economists in a Reuters poll.

 

While the latest poll of 100 economists, taken May 12-18, showed growth will rebound in the second quarter to 3.2 percent, forecasts suggest that will be the best rate through to the end of next year, with annual averages for this year and next well below the 3 percent target.

 

Will weaker economic growth prevent the Fed from raising their benchmark rate? Hard to say and we will have to wait until next month to know for sure.

 

 

The Conference Board Leading Economic Index for the U.S. Increased

 

The Conference Board Leading Economic Index® (LEI)for the U.S. increased 0.3 percent in April, following a 0.3 percent increase in March, and a 0.5 percent increase in February.

 

Ataman Ozyildirim, Director of Business Cycles and Growth Research at The Conference Board said:

 

The recent trend in the U.S. LEI, led by the positive outlook of consumers and financial markets, continues to point to a growing economy, perhaps even a cyclical pickup. First quarter’s weak GDP growth is likely a temporary hiccup as the economy returns to its long-term trend of about 2 percent. While the majority of leading indicators have been contributing positively in recent months, housing permits followed by average workweek in manufacturing have been the sources of weakness among the U.S. LEI components.

 

Remember we have been seeing weak first quarters the past several years. However, we need the drama in DC to end if we are going to see sustainable economic growth.

 

That’s it for today!

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