Mortgage Insider: Brian M. Cavanaugh
October 31, 2008 | Filed Under Mortgage and Finance | Leave a Comment
Please see below for Brian M. Cavanaugh’s insight into the mortgage market. Brian is a Senior Loan Officer at JPMorganChase in downtown Boston and is more than happy to assist you with all your mortgage needs.
Fed Cuts to Stimulate Economy
This week’s economic data and comments from Fed officials confirmed the economic outlook shared by most investors, namely that the economy is slowing sharply. Wednesday, the Fed cut the target Fed Funds rate by one half point to 1.00%, as widely expected. The vote was unanimous and followed a coordinated half point rate cut on October 8. Investors believe the statement left the door open for further rate cuts and have priced in another half point rate cut before the end of the year. The Fed appears to be most concerned with boosting near-term economic growth. While aggressive short-term stimulus is good for the stock market, mortgage investors are worried about its impact on long-term inflation, and those concerns helped pushed mortgage rates higher during the week.
A second factor also contributed to this week’s rise in mortgage rates. The federal government’s takeover of Fannie Mae and Freddie Mac in September left mortgage investors with the impression that there was explicit government backing of the debt and guarantees issued by Fannie and Freddie.
Government officials have been sending mixed messages, however, raising some concern about whether the two companies really will have the long-term backing of the government. Due to the uncertainty, investors, particularly important foreign investors, have been reluctant to invest in Fannie and Freddie guaranteed mortgage backed securities. Yields required by mortgage backed security investors directly affect most mortgage rates. If the government were to unambiguously convince investors that it will stand behind Fannie and Freddie guarantees, then mortgage rates could be expected to move lower.
Week Ahead
The biggest report next week will be Friday’s important Employment data. As usual, this data on the number of jobs, the Unemployment Rate, and wage inflation will be the most highly anticipated economic data of the month, since the health of the labor market is perhaps the single biggest factor in the performance of the economy.
Earlier in the week, the ISM manufacturing index and Construction Spending will be released on Monday. ISM Services is scheduled for Wednesday, and Productivity will come out on Thursday. Finally, Pending Home Sales, a leading indicator for the housing market, will be released on Friday.
Local rents up 4.2% this year.
October 31, 2008 | Filed Under Boston Apartments, Real Estate Investment, Mortgage and Finance, Boston Lifestyle, Boston Real Estate | Leave a Comment
According to the Boston Globe, area rents are up 4.2 percent this year. This is the largest rent hike in seven years. The average monthly rent in the metro-Boston area increased to $1,659 in the third quarter of 2008 from $1,592 in the third quarter of 2007. Demand for rental properties is on the rise mainly due to repercussions of the mortgage crises. If you are an investor, this is a great time to buy and lock in a low rate while demand and inflation push the rental prices skyward.
Homeowners Remain Optimistic Despite Market Trends
October 30, 2008 | Filed Under Real Estate News | Leave a Comment
Nearly half (49 percent) of U.S. homeowners believe their home has increased in value or stayed the same during the past 12 months despite data to the contrary, according to Zillow’s Q3 Homeowner Confidence Survey. Nearly three-fourths of all homes (74 percent) have lost value in the past 12 months, Zillow reports.
Homeowners are slightly less optimistic about the future than they were last quarter, but believe the housing market will be more stable in the next six months than it was during the last 12 months. While more than half (51 percent) of homeowners believe their home’s value decreased over the past year, only 40 percent think it will decrease in the next six months. Only 21 percent think their home’s value will increase in the next six months compared with 32 percent who predicted an increase during the second quarter.
“We are seeing some movement toward more accurate perceptions of home value declines, but there’s still a significant gap between reality and perception,” says Dr. Stan Humphries, Zillow’s vice president of data and analytics. “We’re seeing a fascinating distinction in consumer psychology — on the one hand, homeowners appear to understand the reality of today’s economy and are curbing their household spending, but on the other hand, they still aren’t ready to admit that these woes might extend to their own homes. There’s clearly still some denial,” he says.
S&P Home Price Index Posts New Record Declines
October 29, 2008 | Filed Under Real Estate News, Boston Real Estate | Leave a Comment
Prices of existing single-family homes continued to decline in the second half of 2008, falling by a record amount in August, according to the latest S&P/Case-Shiller Home Price Index released yesterday. The study’s 10-city composite posted an annual decline of 17.7 percent from August of 2007, while the broader 20-city composite fell by 16.6 percent, both of which are record drops.
August marked the fifth straight month that all 20 metro areas tracked by the index posted negative annual returns, with six markets reporting declines of more than 20 percent. The markets posting the steepest annual home-price declines were Phoenix, Ariz., down 30.7 percent; Las Vegas, down 30.6 percent; and Miami, down 28.1 percent. Charlotte, N.C. was the best performing market with a decline of only 2.8 percent for the year.
Boston and Cleveland managed to post modest month-over-month gains in August, while Chicago and Denver remained steady. San Francisco and Phoenix reported the worst monthly declines, falling 3.5 percent and 2.9 percent, respectively.
So you want to find a Foreclosure.
October 27, 2008 | Filed Under Foreclosure, Real Estate Investment, Boston Lifestyle, Boston Real Estate | Leave a Comment
You have all heard that Boston foreclosures are everywhere. You have also probably noticed that finding a consolidated list of them is practically impossible. There are, of course, the foreclosure websites such as RealtyTrac.com and Foreclosure.com; however, these sites are often not updated and carry a hefty price for info. If you are serious about finding a good foreclosure deal, first find a good buyers’ agent. Not only can buyers’ agents find foreclosures easily on their MLS and LINK systems, a good one will have experience researching the foreclosure properties and negotiating with banks. Negotiating with a bank is not at all like negotiating with an individual. Purchasing a foreclosure can be quite complicated and it is a good idea to have a professional looking out for your best interests.
After Steep Rise, Mortgage Rates Fall
October 27, 2008 | Filed Under Real Estate News, Mortgage and Finance, Boston Real Estate | Leave a Comment
Only one week after their largest jump in 21 years, mortgage rates took a dive. The benchmark 30-year fixed rate fell 42 basis points this week to 6.32 percent according to Bankrate.com. The benchmark 15-year fixed-rate mortgage fell 47 basis points to 5.93 percent according to the same site. If you are considering purchasing a Boston home in the near future, make sure that you lock a rate quickly, but have the option for at least one “float” down lock.
New-Home Sales Rise in September
October 27, 2008 | Filed Under Real Estate News | Leave a Comment
Sales of new single-family homes rose 2.7 percent in September to a seasonally adjusted annual rate of 464,000, up from the revised August rate of 452,000, the U.S. Commerce Department reported this morning. This is a 33.1 percent drop from the September 2007 estimate of 694,000.
The median sale price of a new home fell 9.1 percent from $240,300 in September 2007 to $218,400 last month. There were 394,000 homes available for sale at the end of September, which represents an 10.4-month supply at the current sales rate, down from the 11.4-month supply in August but up from the 9.4-month supply reported last year.
Existing-Home Sales Jump in September
October 25, 2008 | Filed Under Real Estate News | Leave a Comment
Sales of existing homes rose 5.5 percent in September to a seasonally adjusted annual rate of 5.18 million units from 4.91 million in August, NAR reported yesterday. Sales were up 1.4 percent from the 5.11 million-unit pace in September 2007, marking the first year-over-year increase since November 2005. The national median sale price for existing homes was $191,600, a 9.0 percent decline from $210,500 a year ago.
Total housing inventory fell 1.6 percent in September to 4.27 million. This represents a 9.9-month supply of available existing homes, down from the 10.6-month supply in August.
Existing-home sales in the West, Midwest and South rose month-over-month by 16.8 percent, 4.4 percent and 2.2 percent, respectively, while sales in the Northeast fell 1.2 percent. Year-over-year sales increased in the West by 34.4 percent, but decreased in the Midwest, South and Northeast by 2.5 percent, 7.8 percent and 7.7 percent, respectively.
NAR chief economist Lawrence Yun says, “Compared to a fairly small share of foreclosures or short sales a year ago, distressed sales are currently 35 to 40 percent of transactions. These are pulling the median price down because many are being sold at discounted prices.”
Home Prices Fall in August: OFHEO
October 24, 2008 | Filed Under Real Estate News | Leave a Comment
U.S. home prices fell 0.6 percent from July to August and 5.9 percent compared to a year ago, according to the Office of Federal Housing Enterprise Oversight’s (OFHEO) latest monthly House Price Index. The index is calculated using purchase prices of homes with mortgages bought or guaranteed by Fannie Mae or Freddie Mac. Home prices have fallen 6.5 percent since their peak in April 2007, OFHEO reports.
High Rise Tower Proposed For Government Center Garage
October 23, 2008 | Filed Under Real Estate News, Boston Real Estate | Leave a Comment
Owners of the Government Center Garage want to replace the concrete eyesore with a skyscraper that would rival the Boston’s Prudential tower in height.
The 3.3 million-square-foot, mixed-use development proposal includes a pair of glass office towers on a parcel closer to Government Center. The tallest tower would be 52 stories, the same height as the Prudential Building at 800 Boylston. The other would reach 42 floors.
On the parcel closer to the Rose Fitzgerald Kennedy Greenway, four buildings are proposed for housing and retail, ranging from 8-14 stories. The buildings would be wrapped around a garage masked by the project.
In addition, District A-1 Police Headquarters and another city-owned building on nearby New Sudbury Street would be razed to make way for the $2 billion transit-oriented development adjacent to Haymarket MBTA station.
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