What’s The Real Estate Market Doing?

Do you ever wonder how our real estate market is here in Des Moines? Unfortunately, we spend a lot of time listening to how rough things are in other cities around the country, but too often we don’t really consider what our real estate climate is like.

I’m a fan of having as much information available before I take action on any big decisions. I don’t know about you, but I think buying or selling a home is a pretty big deal.

As a blogger and mortgage professional, when I receive good information - I pass it on. Home listings and sales are an interesting set of information most of us don’t have super easy access to. Thankfully, I have a Realtor that hammers me with e-mails (Just kidding, I don’t mind them) on market updates and her opinion on where things are at.

Do YOU Need Help?

As a mortgage professional, I cannot sell real estate.  I can however help you connect with a Realtor.  If you are looking for some answers, I’d be happy to introduce you to someone who can help!  No question is silly or too off the wall.

I can also reach out to my connections throughout the country if you’re looking for real estate outside of Iowa.  So please, feel free to contact us, we’d love to help!

Why Should You Care About Statistics?

Whether you’re looking to purchase, sell or refinance a home - this stuff matters. These statistics are compiled from the Multiple Listing Service and cover the Des Moines, Iowa residential real estate market.

With her permission, I post the facts here so you can come up with your very own market opinion. Here’s this week’s market commentary:

“Remember that active listings is down under 5500 and at one time it was over 7100.  That means that selection is declining, but houses are priced much more reasonably than they were a year a or so ago.  There are great deals to be had out there and I would love to help you find them.  Please let me know if you have any questions about buying, I have put together a great handbook that I would love to share with you.

- Heather Barglof, RE/MAX Real Estate Concepts

What Does This Report Cover?

I really enjoy this chart because it gives a breakdown of:

• Days on the Market
• Price Per Square Foot
• Number of New Listings
• Number of Expired Listings
• Number of Price Reductions
• Pending Home Sales (by price)
• New Home Sales (by price)
• All Active Home Sales (by price)
• Best of all, it compares this week vs. last week and last year!

This is a great chart.  I’m not a Realtor and would never try to take the place of one.  If you’re looking for statistics in your specific neighborhood (because your neighborhood is the only one that matters when you’re selling), I can help connect you with the right Realtor for the job!

We Love Great Information and Love to Give Great Information!

If you’re a super cool person and have any market statistics you think our readers would find valuable, please feel free to contact me. If it’s relevant, It’ll show up here!

If you’re looking for my professional opinion or looking for a comment (press related), please contact me here.

It’s the Time To Give.   The Fed’s Giving You a Lower Interest Rate!

The Fed Makes The Announcement

For its last move in an action-filled year, the Federal Reserve announced it will begin buying its pledged $500 billion in mortgage-backed securities next month.

Good News For Mortgage Shoppers!

For home buyers and mortgage rate shoppers, the timing couldn’t be better.

Because December 31 is one of Wall Street’s most thinly-traded days of the year, low volume is exaggerating the announcement’s impact on mortgage markets.

Mortgage rates opened up lower this morning and managed to close with modest improvements.

There Was Little Time to Lock In!

However, you may not have much time to act.  Few mortgage lenders permit after-hours rate locking and bond markets close at 2:00 PM ET for the holiday.

If you miss today’s Fed-fueled low rates, markets re-open Friday for your second chance.

Moving Forward

It’s my personal opinion that mortgage rates will continue to improve over the next two months.  Rates tend to trade in a range.  Rates are currently trading in a range of 4.5% and 5.5%.  As different economic announcements (like today’s) come available, rates move quickly.

If you’re working with a mortgage professional, make sure that they have access to live bond quotes.  Mortgage rates are directly tied to mortgage backed securities.  This is why it’s important to know what’s happening in the the market in real time.  If you’d like to see where things are throughout the day, feel free to follow me on Twitter.

Stay tuned.  This will definitely get interesting!

Photo Kudos: PaperByDesign on Flickr

What’s The Real Estate Market Doing?

Do you ever wonder how our real estate market is here in Des Moines? Unfortunately, we spend a lot of time listening to how rough things are in other cities around the country, but too often we don’t really consider what our real estate climate is like.

I’m a fan of having as much information available before I take action on any big decisions. I don’t know about you, but I think buying or selling a home is a pretty big deal.

As a blogger and mortgage professional, when I receive good information - I pass it on. Home listings and sales are an interesting set of information most of us don’t have super easy access to. Thankfully, I have a Realtor that hammers me with e-mails (Just kidding, I don’t mind them) on market updates and her opinion on where things are at.

Do YOU Need Help?

As a mortgage professional, I cannot sell real estate.  I can however help you connect with a Realtor.  If you are looking for some answers, I’d be happy to introduce you to someone who can help!  No question is silly or too off the wall.

I can also reach out to my connections throughout the country if you’re looking for real estate outside of Iowa.  So please, feel free to contact us, we’d love to help!

Why Should You Care About Statistics?

Whether you’re looking to purchase, sell or refinance a home - this stuff matters. These statistics are compiled from the Multiple Listing Service and cover the Des Moines, Iowa residential real estate market.

With her permission, I post the facts here so you can come up with your very own market opinion. Here’s this week’s market commentary:

“I hope that everyone had a wonderful Christmas last week and hopefully you are all enjoying the sunny weather we are seeing today.  Below is your weekly look at the Des Moines Real Estate Market.  Naturally last week was a little off with the holiday in there and I expect we will see a similar trend this week as well.  Our active listings continue to decline to the 5500 mark with our days on market still hovering around that 100 range.  If you are thinking about selling your house, now is the time to get it on the market.  With interest rates low it is a great time for people to buy.  If you are thinking about selling your home, make sure to price it accordingly, overpriced homes continue to sit on the market.”

- Heather Barglof, RE/MAX Real Estate Concepts

What Does This Report Cover?

I really enjoy this chart because it gives a breakdown of:

• Days on the Market
• Price Per Square Foot
• Number of New Listings
• Number of Expired Listings
• Number of Price Reductions
• Pending Home Sales (by price)
• New Home Sales (by price)
• All Active Home Sales (by price)
• Best of all, it compares this week vs. last week and last year!

This is a great chart.  I’m not a Realtor and would never try to take the place of one.  If you’re looking for statistics in your specific neighborhood (because your neighborhood is the only one that matters when you’re selling), I can help connect you with the right Realtor for the job!

We Love Great Information and Love to Give Great Information!

If you’re a super cool person and have any market statistics you think our readers would find valuable, please feel free to contact me. If it’s relevant, It’ll show up here!

If you’re looking for my professional opinion or looking for a comment (press related), please contact me here.

Understanding the Mortgage Market

Mortgage markets are like any other market, in order for goods to change hands, a buyer and a seller must first agree to “trade” at a specific price point.

In general, the more buyers and sellers there are for a particular item, the easier it is to find that “fair value” and make the deal.

A Normal Market

An abundant number of buyers and sellers often creates a liquid market in which assets (in this case mortgage bonds) can be sold rapidly with minimal loss.

A Vacation Market

This week, there are some people on vacation.  The “liquid market” has gone illiquid.  The treasury market posted just 41 percent of its normal, daily volume Monday (yes, seriously), leading to wild pricing in the mortgage bond market which, in turn, caused mortgage rates to follow.

For example, mortgage rates started the day lower yesterday before moving back higher over a 30-minute, early-afternoon span.  Markets weren’t provoked by economic data, geopolitical developments, or technical factors.  It just, kind of, “happened” and the move left mortgage rate shoppers in the dust.

Learning From Mistakes

This scenario could continue to happen a lot this week.  So, if you’re in the market for a mortgage, be ready to lock quickly.  With low liquidity, rates rarely sit still for long.

Photo Kudos: Purdue BCM

Another Holiday Week, Even Less News!

This week, much like last week, is interrupted for the holiday.  Regardless, there’s not much going on.

Aside from the two economic reports listed below, there is nothing else for markets to digest and there are no planned speeches by members of the Fed (this can often catch lenders off guard if they aren’t watching the speaking schedule).

Many traders will probably take the week off.  This means volume will be especially light.  But don’t take this lightly and take your eyes off the market!  This can often mean high volatility.

For now, mortgage rates are hovering near their 2008-lows.  Given the path of the dollar and low-volume trading, that could all change in a flash.

What to Watch This Week?

Since there’s always a lot going on, I like to pick out the two most likely ‘market moving’ reports each week.  If I had to pick a couple of reports to watch, they would likely be:

1. Stock Market - All Week - This will give direction on where mortgage backed securities will go.  Remember, as fear enters the market, money moves from equities (the stock market) into bonds (mortgage backed securities).  Big moves in the stock market could mean big moves for mortgage rates.
2. ISM Index - Friday - Always a hint on how production is.  If this comes in weak, it’s a sign of a slowing economy.  Any guesses on how this will come in?…  

You Can Stay Updated!

I’ll be following things as they happen with live mortgage bond quotes and do what I can to keep everyone informed through Twitter. My clients always get the advice first, so I’ll try to filter though as quickly as I can.

Here’s this week’s economic calendar:

As a Consumer, How Do You Keep Posted on the News?

I’ll do my best to keep you posted throughout the week via Twitter. If you’re interested in finding out more about what effects mortgage rates and which direction they’re headed, feel free to follow me!

Work With Mortgage Professionals In The Advice Business

It’s important to recognize that advice is extremely valuable when looking for a mortgage. The right advice can literally save you thousands of dollars, while the wrong advice can cost you the same.  Some mortgage professionals really don’t know what mortgage rates are based on, period.  If you want to get the best deal, having a professional that can give you that type of advice is extremely important.

Why Am I Posting A Calendar?

I provide this weekly news update because too often when we’re shopping around, we ask the wrong questions. The first thing you’ve got to have your antenna up on is economic news if you want to have any idea what direction rates are moving.

So You Say, What Are Mortgage Rates Currently?

I get this question all too often. If I’m being fair.. and honest (which is my policy). I would be doing you a huge disservice to just quote a rate.

Truth be told, there are literally 27 different factors that go into a custom rate quote. There are also thousands of programs (constantly changing as well). It’s extremely important that you are educated on what is available and most importantly what is the best mortgage plan for you to personally implement.

It’s natural to have a list of questions. I’d love to help work through them with you and educate you on what you need to know about the mortgage process. I can help with everything from how to pre-qualified to what to do after closing (where I will continue working for you)!

It’s what we do, and it would be my honor to add you to our list of raving fan clients. If you’re currently looking for a mortgage loan or know someone that might have questions about one, please have them contact me. I’d be happy to assist them. It’s literally what I love doing! I promise to take great care.

Original Photo Kudos.

A Holiday Week Provides Little Movement In the Market

In a week defined by extremely low trading volume and lack of action, mortgage markets idled ahead of the holiday last week.  Friday’s post-holiday action was even slower.  I think people were sleeping their holiday meals off.  Just my opinion.

After falling for two consecutive weeks, mortgage rates held flat last week.

Plenty Happened!

It’s somewhat surprising that mortgage rates didn’t change considering the flow of negative economic news last week:

• Joblessness appears to be worsening
• Consumer spending sputtered
• The U.S. dollar is showing weakness

Lately, each of these elements has played a role in mortgage rate movement but it’s the last point that could throw home buyers and refinancing Americans a curve ball and leave them unhappy.

What’s Currency Got To Do With It?

It’s because of the relationship between mortgage rates and the strength of the U.S. Dollar.

All things equal, a strong dollar pressures mortgage rates lower whereas a weak dollar pressures mortgage rates up.  And, because the dollar’s recent beat-down has been swift, it wouldn’t be unexpected to see similar mortgage market movement at any time.

Specifically, What Did Those Reports Say?

Each week, I put up an economic calendar of news coming out that following week.   Here’s the what actually happened with those reports last week:

What Impacts Mortgage Rates?

If you’re looking to purchase or refinance a home, it’s important to know what moves mortgage rates.  There are normally two major things that impact the direction:

1. Economic News.  (Like the calendar above).
2. International News. (major events, pending legislation, war related news, etc).
3. Stock Market. (Money flows from equities (stocks) to bonds when it seeks shelter).

What Are Rates Based On?

It’s been mentioned before, but as a common reminder - mortgage rates are only based on one thing. Mortgage Backed Securities (MBS).  The only way you have access to these is through live bond quotes.

Looking For Mortgage Rates?

If you’re looking for specifically what mortgage rates are doing, I’d be happy to help with a custom rate quote.  Each scenario is different (there are 27 different factors a mortgage rate is determined by).  If you or someone you currently know are looking for a mortgage, I’m here to help!

Information without obligation.  That’s my policy.  If you like what you hear, my team would love to help!

(Image courtesy: The Wall Street Journal)

It’s a Great Time To Be An Investor

With home prices falling across most parts of the country, investors in real estate are finding good value in certain rental properties.  Unfortunately, they’re also now finding it harder to get approved for a home loan.  Things have definitely changed over the past year.

It’s Been a Tough Time To Be a Mortgage Lender

After getting hammered by defaults, conforming mortgage requirements for non-owner occupied home loans tightened dramatically the last six months.

Lenders Want Less Exposure

One major change was the reduction in the total number of homes Fannie Mae or Freddie Mac will finance for any one borrower.

Prior to the change, the number of financed properties could be as high as 10.  Today, that number is 4, immediately hurting investors with large real estate portfolios.  Going forward, buying properties isn’t the problem; financing them with conforming mortgage money is.

Keep in mind this is not a limit of 4 properties per lender.  It’s 4 financed properties total.

More Skin In the Game

Another guideline change mandates larger downpayments on loans.

Back in early-2008, a real estate investor could buy a home with 10 percent down.  Today’s investor is required to pay 15%.  But, as an added wrinkle, few private mortgage insurers write policies against rental homes anymore.  Thus making the 15% downpayment insufficient.  If you cannot get PMI to protect the lender, you’re then left with 20% down payment required.

Ouch.

Higher Risk Assessment

When a lender sees a larger risk on a ‘pool’ of loans, they tend to charge a higher interest rate in exchange for providing a mortgage.

As part of this “pay-for-risk” pricing model, Fannie Mae added mandatory fees to all of its investor property mortgages this year.  Based on loan-to-value, the fees are:

• 75% LTV or less: 1.750 percent of the borrowed amount
• 75.01 - 80.00% LTV : 3.000 percent of the borrowed amount
• Greater than 80% LTV : 3.750 percent of the borrowed amount

Don’t look at the rates normal homeowners are getting on mortgages (i.e. 4.75%) when considering purchasing an investment property.   They are vastly different.

Now You Know!

So, if your personal plan includes the purchase of investment properties in 2009, consider the impact that tighter conforming guidelines, larger downpayments and higher fees will have on your bottom line.

All things considered, now may be a good time to make that rental property bid.  Sure, prices may fall going forward, but increased acquisition costs may wipe out the long-term gains.

Let’s talk if this is a part of your plan.  I’d be happy to help you put together the figures and make sure that buying investment property is a decision that will cash flow for you.

Changing Times

For the first time in over a year, the sales of “used homes” fell below the

5-million unit trendline, helping to push the total home inventory higher by 0.1 percent nationwide.

Based on the rate at which homes are selling nationwide, it would take 11.2 months for the existing housing supply to be exhausted.  That’s a lot.  In a ‘perfect market’ a 6 month supply is perfect.

For home buyers, this is an opportune time for negative news on housing.

Quiet Time for Buying Homes

First, sellers know that between now and the Super Bowl, housing activity will be light.  The general scarcity of buyers may force a seller to accept a bid he wouldn’t have accepted otherwise.

An Uncertain Economy

Second, the economy is showing weakness and that, too, can concern a home seller.  Buyers are less likely to extend themselves during times of economic uncertainty, further reducing the buyer pool and, again, putting pressure on the seller to “make a deal”.

The Government Wants You to Buy!

And lastly, because the government has been trying to force mortgage rates down as a way to stimulate the economy, the weak housing data is actually making it cheaper to finance a home.  This means that a well-qualified home buyer can better stay within budget.

Each 0.500 percent rate reduction saves $33 per $100,000 borrowed.

Real Estate is Local!

It is important to remember, though,  that the U.S. housing market is not national — it’s highly localized.  This is one reason why national real estate reports can be misleading.  Just as figures from Phoenix have little to do with statistics from Des Moines, even data from neighboring ZIP codes can vary.

The universal truth, however, is that a home that is priced fairly will sell more quickly than a home that is not.  And, until the Super Bowl passes in 45 days, expect fewer buyers to be out there competing for them.

(Image courtesy: The Wall Street Journal Online)

Remember What Caused It

In late-November, the Federal Reserve pledged $600 billion to buy mortgage-backed securities.  The announcement drove down mortgage rates and started the ‘first’ Refi Boom.

Then, the Federal Reserve made a second series of statements after its scheduled meeting last Tuesday, causing mortgage rates to plunge again.  This started the Refi Boom’s second wave.

Because of the surge in refinance activity, mortgage lenders are “backed up”; initial file reviews are taking up to 12 business days in some cases.  Remember, many companies cut back on staff earlier this year when things were slow.

Typically, this underwriting process takes 2 days.

What’s It Mean To You?

Underwriting delays are problem for refinancing Americans because when a mortgage rate is locked, it’s most often locked for 30 calendar days — the standard Rate Lock Agreement contract length.  If the mortgage doesn’t close within those 30 days, the applicant must either pay an “extension fee” to preserve the lock, or risk losing the rate altogether.  Bad news, right?

30 days may seem like a long time, but let’s consider a few external variables:

• December 24, 25, and 26 plus January 1 and 2 are lost to holiday
• December 27, 28 plus January 3, 4, 10, 11, 17, and 18 are lost to weekends
• January 19 is lost to federal holiday
• 3 days are lost to the Right To Cancel clause

This leaves 13 days to get from Application to Closing, and of those 13 days, 12 of them are being spent on the initial review.  A 30-day rate lock, in other words, may be an inadequate agreement with some mortgage lenders.  A 45-day agreement may be required instead.

The Bad News About Abnormal Underwriting Turn Times

Typically, 45-day rate locks carry higher rates or higher fees, versus their 30-day counterparts.  This amounts to a “tax” on borrowers, a result of the nation’s rush to refinance with the rest of the pack.

As always, the best way to preserve a rate lock is to be as responsive as possible to the process.  Return paperwork when asked, schedule appraisals immediately, and arrange to signing closing paperwork on the first available day.  NO slacking.  There simply isn’t time for it.

With mortgage rates low, application volume — and underwriting turntimes — should remain high into early-2009.  There will be booms to follow in 2009.

It’s Going to Be a Short Week!

This week is trade-shortened and thick with economic data.  In addition to two pieces of housing news and a consumer sentiment survey, we’ll get a look at the Federal Reserve’s preferred Cost of Living index.  All four data points are expected to validate the recession, so don’t expect mortgage rates to move much.  Remember, we already know all of this news.

Instead, the biggest threat to mortgage rates this week is momentum.  If mortgage rates tick higher Monday and Tuesday, expect that to continue Wednesday into the 2:00 P.M. market close and then to resume again Friday.

As a reminder (I hope this isn’t a surprise) markets are closed Thursday for the federal holiday.

What to Watch This Week?

Since there’s always a lot going on, I like to pick out the two most likely ‘market moving’ reports each week.  If I had to pick a couple of reports to watch, they would likely be:

1. Personal Consumption Expenditures (PCE) - Wednesday - I talk about it all the time.  Inflation.  It’s the enemy of mortgage rates and if this report shows any concerns of inflation, plan on seeing mortgage rates heading higher. With all of the recent talk of ‘deflation’, I doubt this will be a huge market mover, but it has the potential to be.
2. Jobless Claims - Wednesday - We all know unemployment is on the rise.  The question is how many people lost their job last week?… This report will tell us the initial figures.  The uglier the number, the better for mortgage rates.  I’m not rooting for it though.

You Can Stay Updated!

I’ll be following things as they happen with live mortgage bond quotes and do what I can to keep everyone informed through Twitter. My clients always get the advice first, so I’ll try to filter though as quickly as I can.

Here’s this week’s economic calendar:

As a Consumer, How Do You Keep Posted on the News?

I’ll do my best to keep you posted throughout the week via Twitter. If you’re interested in finding out more about what effects mortgage rates and which direction they’re headed, feel free to follow me!

Work With Mortgage Professionals In The Advice Business

It’s important to recognize that advice is extremely valuable when looking for a mortgage. The right advice can literally save you thousands of dollars, while the wrong advice can cost you the same.  Some mortgage professionals really don’t know what mortgage rates are based on, period.  If you want to get the best deal, having a professional that can give you that type of advice is extremely important.

Why Am I Posting A Calendar?

I provide this weekly news update because too often when we’re shopping around, we ask the wrong questions. The first thing you’ve got to have your antenna up on is economic news if you want to have any idea what direction rates are moving.

So You Say, What Are Mortgage Rates Currently?

I get this question all too often. If I’m being fair.. and honest (which is my policy). I would be doing you a huge disservice to just quote a rate.

Truth be told, there are literally 27 different factors that go into a custom rate quote. There are also thousands of programs (constantly changing as well). It’s extremely important that you are educated on what is available and most importantly what is the best mortgage plan for you to personally implement.

It’s natural to have a list of questions. I’d love to help work through them with you and educate you on what you need to know about the mortgage process. I can help with everything from how to pre-qualified to what to do after closing (where I will continue working for you)!

It’s what we do, and it would be my honor to add you to our list of raving fan clients. If you’re currently looking for a mortgage loan or know someone that might have questions about one, please have them contact me. I’d be happy to assist them. It’s literally what I love doing! I promise to take great care.

Original Photo Kudos.