Foreclosure Rates Expected To Dip Below 12-Year Low

Posted in Real Estate by Michigan Real Estate Expert on October 19th, 2018

Foreclosure Rates Expected To Dip Below 12-Year LowThe record-setting pace of the U.S. economy continues to positively impact the housing market and home foreclosures now stand at an astonishing 12-year low.

Coming off a GDP growth rate of 4.1 percent and a historic bull stock market run, everyday Americans appear to be benefiting from one of, if not the strongest economies in decades. According to data compiled by CoreLogic, mortgage delinquency rates continue to improve and are already at the lowest levels in 12 years.

Building on last year’s national trend, foreclosures and mortgages more than 30 days past due declined to 4.2 percent in May. Other analytics show that mortgages at some stage in the foreclosure process also dipped by.02 percent from May 2017 to 2018. With a low 5-percent national foreclosure rate, the industry enjoys its best forecast since September 2006.

Some Housing Markets Lag Behind

While the country appears to be immersed in an economic revival, areas impacted by severe weather and hurricanes have not quite shaken off their impact.

“Serious delinquency rates continue to remain lower than a year earlier except in Florida and Texas, the hardest-hit states during last year’s hurricane season, CoreLogic president and CEO Frank Martell reportedly said.

There are also regions unaffected by hurricanes that are also lagging behind the strengthening conditions, according to research by ATTOM Data Solutions.

  • Foreclosures increased in eight states and the District of Columbia through the first half of 2018.
  • The District of Columbia suffered the worst foreclosure rate in the nation with a 60-percent increase over 2017.
  • Foreclosures increased in only 28 of 217 metropolitan housing markets studied. Oklahoma City topped the list with a 22-percent uptick.
  • Through June 2018, New Jersey endured the highest state foreclosure rate, with.99 percent of all properties in foreclosure.

According to ATTOM, Atlantic City, Trenton, Philadelphia and Chicago topped the list of total foreclosures during the first half of 2018.

2019 Foreclosure Predictions

History makes an excellent teacher and the wildfires destroying California communities are expected to negatively impact home ownership.

“While the strong economy has nudged serious delinquency rates to their lowest level in 12 years, areas hit by natural disasters have had increases,” CoreLogic chief economist Frank Nothaft reportedly said. “The tragic wildfires in the West will likely lead to a spike in delinquencies in hard-hit neighborhoods.”

“As an example, the wildfire in Santa Rosa last year destroyed or severely damaged more than 5,000 homes,” Nothaft reportedly said. “Delinquency rates rose in the aftermath, and in the ensuing months we observed home-price growth accelerate and sales decline. We will likely see the same scenario unfold in fire-ravaged communities this year.”

While America’s collective hearts go out to the families displaced by the California wildfires, the positive economic trends are expected to continue in much of the country.

CoreLogic’s Nothaft predicts foreclosure and delinquency rates to decline even further. Heading into 2019, positive numbers could upstage the current 12-year low and reach levels not seen in upwards of 15 years.

Contact your trusted real estate professional to learn about the market trends in your area.

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U.S. Wage Increases Could Help Home Buyers

Posted in Mortgage by Michigan Real Estate Expert on October 18th, 2018

U.S. Wage Increases Could Help Home BuyersThe struggle to achieve the American homeownership dream often feels like it happens in a vacuum. Everyday people work hard, save money and polish up their credit to get a low mortgage rate.

But there are powerful forces at work that are far beyond each person’s control. And until recently, the gap between American wage growth and rising home prices was widening. According to data coming out of the U.S. Department of Labor, unemployment recently hit a 49-year low and wages are enjoying the greatest uptick in nearly a decade. That is good news for prospective home buyers.

American Wages On The Rise

The 2018 economic news has seemed like one long greatest hits album. Historic-low unemployment for African-Americans and Hispanic-Americans has spurred confidence among these groups and the national unemployment has been steadily under 4-percent. The stock markets are booming, and the GDP growth has been impressive.

But there has been some frustration over stubborn wages that haven’t kept pace with other metrics. A report following stagnant salaries in February pointed to no slow down between rising home prices and wallowing pay rates. The growth rate was reportedly a modest 0.1 percent gain in February and that put Americans behind the curve in terms of buying homes.

But numbers coming out of the second quarter jobs report point to a 10-year high wage increase. The Bureau of Labor and Statistics reported wages are rising as employers compete to fill positions and the 12-month increase stands at 2.9 percent through August.

These are key numbers that may put a smile on potential home buyers’ faces.

  • Wages rose 0.5 percent in the second quarter of 2018.
  • Through August, wages rose 2.9 percent over the previous 12-month period.
  • Private industry compensation increased by 2.9 percent.
  • Government compensation increased by 2.3 percent, down from 2.6 in 2017.
  • Sales jobs gained by 3.5 percent.
  • Transportation jobs increased by 3.4 percent.

Experts are also claiming that setbacks from hurricanes likely blocked wage growth from topping the 2.9 high in 2009.

Where The Housing Market Stands

There’s little doubt that the surging economy put a higher number of Americans in position to purchase homes. However, inventory has remained well behind demand and that created a seller’s market with rising listing prices. But home prices are coming within reach for more people in 2018 and possibly 2019 market.

Since bottoming out in 2102, today’s home prices reportedly stand at about 6 percent higher than they were at their 2006 peak. That is not necessarily an indication that another housing bubble exists. Rather, the uptick in home prices is a natural reaction to an inventory shortage and economic growth.

The optimistic news for prospective home buyers is that wage growth appears to be gaining on home costs. As the gap closes, it’s likely that more and more people will be financially able to secure the American Dream of owning a home.

If you are in the market for a new home, be sure to contact your trusted real estate professional!

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Case-Shiller: Home Prices Hit 11-Month Low in July

Posted in Real Estate by Michigan Real Estate Expert on October 3rd, 2018

Case-Shiller Home Prices Hit 11-Month Low in JulyHome price growth slowed to its lowest pace in nearly a year according to the Case-Shiller Home Price Indices. National home price growth averaged 6.00 percent year-over-year as compared to 6.20 percent growth in June.

The 20-city home price index rose 0.10 percent in July to a seasonally adjusted rate of 5.90 percent year-over-year. Slowing home price growth was attributed to buyer fatigue and rising inventories of available homes.

Las Vegas Home Price Growth Tops 20-City Home Price Index

Las Vegas, Nevada topped the 20-City Home Price index with a year-over-year home price growth rate of 13.70 percent. Las Vegas home prices crashed during the recession but continued to recover as the economy improved.Seattle, Washington home prices rose 12.70 percent year-over-year in July; San Francisco, California held third place in the 20-city Home Price Index with year-over-year home price growth of 10.80 percent. Five cities posted higher home price growth rates than in June.

Freddie Mac Predicts Further Slowing In Home Price Growth For 2018 And 2019

Prior to the release of July’s Case-Shiller data, Freddie Mac analysts said that home buyer budget limitations coupled with more homes for sale caused home price growth to slow. Freddie Mac projected home price growth of 5.50 percent for 2018 and 4.50 percent growth in 2019.

FHFA, the agency that oversees Fannie Mae and Freddie Mac, released its home price index for July and reported lower home price growth in July. After posting steady year-over-year growth rates of 6.80 percent for April, May and June, July home price growth dipped to 6.40 percent. Data in home price data reported by FHFA includes homes connected with mortgages held or guaranteed by Fannie Mae And Freddie Mac.

While slower growth in home prices are good news for potential home buyers, rising mortgage rates, strict mortgage credit requirements and competition with cash buyers continue to create headwinds for home buyers who depend on mortgage financing to fund their home purchases.

For the greatest market advantage, be sure to contact your trusted real estate professional if you are interested in buying a new property or considering listing your current property.

 

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Real Estate Remains A Strong Wealth Management Investment

Posted in Real Estate by Michigan Real Estate Expert on October 2nd, 2018

Real Estate Remains A Strong Wealth Management InvestmentA young long-haul trucker driver once took an elder’s advice and invested all of his money into real estate. Even though he was seldom at home to enjoy the fruits of his labor, he hired a property management company to handle the properties. The advice that stuck with the driver was simple. “They’re not making any more of it, land that is.”

In terms of growing personal wealth, the real estate market may fluctuate, interest rates change, and the GDP can bounce like a ball. But, land is permanent. That may seem like a simplistic view of wealth management. Maybe it is. But that trucker retired early with multiple investment properties and a reasonably wealthy man.

His portrait in wealth management success highlights the notion that real estate remains a strong financial driver. The next logical question is whether or not now is the time to build a powerful real estate portfolio.

Current Market Conditions

Real estate investment does not necessarily follow the popular stock market thinking about buying low and selling high. In fact, investors such as the trucker had no plans to sell at all. That being said, the current real estate trends are widely considered a “seller’s market.” Are they really?

With Millennials and soon Generation Z buying up homes, inventory remains lower than demand. That naturally has resulted in an uptick in listing prices. Couple the supply and demand issue with a Fed raising rates and one might think this is a bad time to buy. Nothing could be further from the truth.

Buying rental properties are long-term investments. Buyers would be wise to do the math on how much the monthly mortgage, insurance, taxes and overhead measure against the potential revenue. Some property owners do their math based on 10 months rather than 12 to account for unexpected expenses. If the math works, it could be a valuable asset.

Real Estate Less Risky Than Stocks

Return on investment in real estate has the potential to far outpace stock buys. Consider that when you purchase a stock, things outside your control impact value and dividends. Think for a moment about how Elon Musk turned Tesla stocks into a roller coaster ride due to a few odd tweets and media interviews.

Owning property insulates investors from many external forces. Over time, rental revenue pays down the note. This allows owners the ability to siphon off money or leverage equity for additional real estate buys. With measured determination, your wealth management portfolio could include multiple properties that are paid off at retirement age. It worked for a truck driver who took some simple advice from an elder.

There’s little doubt that real estate remains a strong asset for increasing personal wealth. If you are considering a purchase, be sure to contact your trusted real estate professional as soon as possible.

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Fed Raises Key Interest Rate For 3rd Consecutive Time

Posted in Real Estate by Michigan Real Estate Expert on September 27th, 2018

Fed Raises Key Interest Rate for 3rd Consecutive TimeThe Federal Open Market Committee of the Federal Reserve announced that it raised the target federal funds rate to a range of 2.00 percent to 2.25 percent. This was the third consecutive increase in the Fed’s key interest rate and was the eighth time the Fed raised its key interest rate since 2015.

In its customary post-meeting statement, Committee members cited strong economic conditions and continued labor market growth coupled with historically low unemployment rates as a basis for raising the federal funds interest rate.

Fed Cites Steady Inflation, Healthy Household And Business Spending

Further economic conditions cited in the FOMC statement were steady inflation, which has held close to the Fed’s objective of two percent for a year. Projections on long-term inflation were “little changed” according to the statement.

FOMC’s statement explained how committee members make decisions about the target range for the federal funds rate. The Federal Reserve must make decisions based on its legislative mandate of achieving and maintaining maximum employment and an inflation rate at or near two percent.

The FOMC also considers measures of economic and labor conditions, pressures on inflation and projections on inflation. Committee members keep up-to-date on domestic and global economic developments.

After the FOMC statement was released, Fed Chair Jerome Powell gave a press conference.

Fed Chair: Economy Strengthening Without Need Of Fed Accommodation

Federal Reserve Chair Jerome Powell expressed confidence in current economic conditions and said that future rate hikes would help maintain the Fed’s goals and promote healthy economic growth. Mr. Powell said that future meetings of the Federal Open Market Committee would be guided by asking and answering the question of whether current monetary policy is set to achieve FOMC goals. Analysts interpreted Chair Powell’s comments as indicating that current economic conditions are as good as could be expected and that the Fed’s monetary policy decisions are working as planned.

 

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NAHB Housing Market Index Unchanged in September

Posted in Real Estate by Michigan Real Estate Expert on September 20th, 2018

NAHB Housing Market Index Unchanged in SeptemberHome builder confidence in housing market conditions stayed flat in September. The National Association of Home Builders Housing Market Index reported an index reading of 67, which matched expectations and NAHB’s housing market reading for August. Analysts cited recent tariffs on building materials as a significant cause of easing builder confidence.

While NAHB called September’s reading “solid” at 67, the reading was one full point lower than the average reading for 2017 and equaled the lowest builder confidence reading in 2018 to date. Readings over 50 in the Housing Market Index indicate that more builders than fewer are confident in housing market conditions.  

Components of the Housing Market Index were mixed as builder confidence in current market conditions rose one point to 74. Builder confidence in market conditions for the next six months rose two points to a reading of 74. Builder confidence in buyer traffic in new housing developments was unchanged with a reading of 49.

Buyer traffic readings frequently fall below the benchmark reading of 50, so a reading of 49 indicates builders aren’t concerned about buyer interest in new homes.

Home Building Viewed As Cure For Housing Shortages, But Buyers Face Challenges

Housing industry leaders, real estate pros and mortgage lenders continued to look to builders for a solution to severe housing shortages in some areas. Rapidly rising home prices driven by high demand, few choices for buyers and aren’t likely to ease until inventories of available homes increase. Recently rising mortgage rates added to pressures on first-time and moderate-income home buyers.

NAHB Chief Economist Rob Dietz said that trade skirmishes and “burdensome regulations” also contributed to rising home prices. Real estate pros said that local market conditions affected market areas affected by natural disasters including severe red tide algae blooms in Florida and wildfires in Oregon and California. Home sales typically slow in August, but the combination of low inventories of homes coupled with rising prices and natural disasters resulted in lower than expected home sales in August.

Buyer fatigue was cited as a driving factor in slowing home sales as rapidly rising prices and few available homes took a toll on buyer interest. As the school year approached buyers were backing off instead of continuing to compete with cash buyers and bidding wars.

It is commonplace for markets to shift and for trends to change. Your best bet for success in buying a new home or selling your current home to rely on your trusted real estate professional.

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