Home Prices Reach 2009 Levels, Gains Moderating Key West Real Estate Blog

Posted by Joe D Wells – Key West Real Estate
BY JANN SWANSON
Home Prices Reach 2009 Levels, Gains Moderating

With the FNC Residential Price IndexTM (RPI) levels for August home prices have climbed back to December 2009 levels. But the index, while it rose 0.6 percent from the July level, is beginning to display signs of a subsiding momentum.

August represented the 18th consecutive month in which home prices have climbed on the RPI, indicating that the housing recovery remains well underway. However that month-over-month increase was smaller than the 0.8 percent monthly increase in July and 0.9 percent in June. The year-over -year appreciation increased over that of earlier months, gaining 5.3 percent compared to the 4.7 percent and 4.6 percent annual increases in June and July. The FNC 100-MSA composite is based on sales of non-distressed new and existing residential properties in the 100 largest metropolitan areas.

The September median sales-to-list price ratio was also moderated, coming in at 96.2, a 3.8 percent listing price markdown among closed sales, compared to 97.2 in August.

Housing market fundamentals, especially foreclosure filings and the foreclosure inventory, continued to improve and contributed to rising home prices. The share of the home sales coming from foreclosures dipped in August to 12.4 percent from 12.7 percent in July and was more than 4.5 percent below one year earlier.

Nearly all of the major housing markets in the FNC 30-MSA posted price increases in August, but some also showed signs of weakening. Phoenix and Los Angeles had month-over-month declines of 0.1 and 0.4 percent respectively following many months of increases averaging 2.0 percent. Denver, another strong-performer in the current recovery, also suffered a small loss in August.

San Antonio recorded the largest monthly increase, 2.1 percent and Las Vegas climbed 1.8 percent, the 10th consecutive month of rapid price acceleration. Home prices in Charlotte and New York also performed strongly. Chicago, where foreclosures sales made up 21.8 percent of the market in August, prices have appreciated by the smallest amount of any city in the 30 MSA index.

FNC’s RPI blends public records of residential sales prices with real-time appraisals of property and neighborhood attributes. The RPI excludes sales of foreclosed homes, which are frequently sold with large price discounts, reflecting poor property conditions.

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Mortgage Rates React to Debt Deal - Key West Real Estate

Post by Joe D Wells Key West Real Estate Homes for Sale

BY MATTHEW GRAHAM

Mortgage Rates React to Debt Deal

Mortgage rates fell today, recovering yesterday's losses on average.  Some lenders' rate sheets were just slightly better or worse than yesterday's latest, but nearly every lender had been worse this morning before releasing revised rate sheets in the afternoon.  30yr fixed best-execution remains at 4.375%, though 4.25% continues to make sense for some scenarios, depending on the difference in cost from 4.375% and personal preference.

The promise of an end to the government shutdown took center stage today, helping both stocks and bonds improve vs yesterday.  The full effects of a finalized deal won't be known until tomorrow, assuming the House and Senate pass the legislation tonight, as expected.

From a market-watching standpoint it's important to keep in mind that the reason we're seeing an unexpectedly positive reaction to the debt deal in the world of longer term interest rates has much to do with the fact that we had been seeing an unexpectedly negative reaction to the overall fiscal drama as October progressed.  Past examples of similar drama suggest that it's usually over-credited as a motivation for longer term rates (like mortgages) when other factors remain more important.

That's not to say that the drama seen so far and the headlines today aren't capable of causing volatility for interest rates, simply that the volatility is likely to be a "wash" when all is said and done.  At that point, the expected source of inspiration remains, as ever, the big jobs report that had been scheduled for October 4th.

Loan Originator Perspectives

"Great day to be floating. Certainly the question of lock/float is important as usual as most consumers are hoping the rally continues. The inconsistencies within the rallies and sell-offs of late, lack of data, and government incompetence leave us at an unpredictable scenario on lock vs. float. We are still within the current range, with a strong rally today one should strongly consider locking. Floating is always risky, however there may be more room for improvement here. Float with extreme caution." -Constantine Floropoulos, Quontic Bank

"Here's to hoping the debt limit deal happens and puts an end to our slow leak higher in recent days. Maybe we can now focus on the lack of tapering and economic numbers that should confirm a slowing economy. This will be good for rates. Will also be interesting to see if the NFP report is released any time soon." -Mike Owens, Partner, Horizon Financial Inc

"Rates improved after today's debt deal announcement.  Floating borrowers might want to wait until tomorrow unless their lenders have substantial price improvements this PM. Rates aside, it's great to (hopefully) have a short term solution to help those impacted by the shutdown." -Ted Rood, Senior Originator, Wintrust Mortgage

"Congress acts and MBS get giddy (good news for rates), but it may be short lived. As my dad used to say, Tomorrow never comes and yesterday don't matter. If you like your rate quote, take it today." -Bob Van Gilder, Finance One Mortgage

"It seems all markets are pleased with the ability of our government to kick the can just a little further down the road. Rate sheets to start the day were worse than the prior day, but by days end lenders repriced better bringing rates closer to their best levels in several months. In my opinion, the gains with MBS justify better pricing, so I think floating overnight might reward you in the morning. But as always, nothing wrong with locking now especially if you are within a couple weeks of closing." -Victor Burek, Open Mortgage

Today's Best-Execution Rates

• 30YR FIXED - 4.25% -4.375%
• FHA/VA - 4.0-4.25%
• 15 YEAR FIXED -  3.375-3.5%
• 5 YEAR ARMS -  3.0-3.50% depending on the lender

Ongoing Lock/Float Considerations

• Uncertainty over the Fed's bond-buying plans and more recently over Fiscal Policy has been making for a tough interest rate environment.
• A lack of data due to the government shutdown caused rates to experience moments of paralysis while headlines suggesting the shutdown might end have caused pockets of volatility.
• Expectations for "tapering" (a reduction in "QE3" asset purchases) mounted over the summer and September 18th was seen as the most likely day for a potential tapering announcement
• But the Fed decided to keep a change in QE amounts on hold until the economy could more convincingly show that rising rates (which had been rising because markets expected the Fed to taper!) wouldn't be too big an impediment to further improvement.
• The Fiscal drag is also a consideration for the Fed and we believe this to be one of the factors preventing rates from rising more quickly
• Rates moved lower after the Fed held off on tapering, but the window of opportunity may be closing.  Ultimately, that will depend on the economic data that's on hold due to the shutdown
• (As always, please keep in mind that our Best-Execution rate always pertains to a completely ideal scenario.  There are many reasons a quoted rate may differ from our average rates, and in those cases, assuming you're following along on a day to day basis, simply use the Best-Ex levels we quote as a baseline to track potential movement in your quoted rate).
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Mortgage Rates Rise to 3-Week Highs – Key West Real Estate Blogs

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Key West Real Estate for Sale

BY MATTHEW GRAHAM

Mortgage Rates Rise to 3-Week Highs

Mortgage rates rose moderately today, bringing them to their highest levels since September 23rd.  Though the recent move higher has happened very gradually, it’s also been fairly determined with none of the past five sessions seeing a move lower.  Today’s incremental dose of weakness was notable in that it was finally enough to unequivocally nudge 30yr fixedbest-execution back up to 4.375%, though buying down to 4.25% continues to make sense for some scenarios depending on personal preference.

Last week, we’d increasingly noted that rates had no incentive to move any lower without market participants getting their hands on the important Employment Situation Report–the most important piece of economic data each month and recently postponed due to the shutdown.  Despite the lack of motivation to move lower, rates held their ground fairly well–remaining in a new range that was distinctly separate from that which characterizes most of the July-September time frame.

At current levels, we’re beginning to blur the lines between these two zones of recent rate levels.  The outlook will remain blurry until the shutdown ends and the important economic data is flowing again.  It continues to be the case that we can’t expect a meaningful move lower without a downbeat jobs report.

Loan Originator Perspectives

“Continued leakage in MBS market as rates trudged upward again today. No incentive for them to improve, given the lack of economic data and DC Dysfunction. We’re hoping to stay in current ranges, but if rates have suffered with just the perception of any progress in DC, might be wise to expect more of the same if/when actual progress occurs. My consensus: if you like your rate, lock while the getting is good. ” -Ted Rood, Senior Originator, Wintrust Mortgage

“The range is still in-tact, however it has moved to a higher threshold. As long as we stay within the range the outlook is semi-bullish. We have an overwhelmingly high risk factor in the status of our government reaching a deal, which can unfold negatively for us either way. If we reach a deal everything is fixed and the risk on trade continues, if we don’t reach a deal the US bond market will suffer tremendously. I would cautiously float here, strongly recommend locking, too many unknowns, delayed data points, etc.” -Constantine Florpoulos, Quontic Bank

 Today’s Best-Execution Rates

• 30YR FIXED - 4.25% -4.375%
• FHA/VA – 4.0-4.25%
• 15 YEAR FIXED -  3.375-3.5%
• 5 YEAR ARMS -  3.0-3.50% depending on the lender

Ongoing Lock/Float Considerations

• Uncertainty over the Fed’s bond-buying plans and more recently over Fiscal Policy has been making for a tough interest rate environment.
• A lack of data due to the government shutdown caused rates to experience moments of paralysis while headlines suggesting the shutdown might end have caused pockets of volatility.
• Expectations for “tapering” (a reduction in “QE3″ asset purchases) mounted over the summer and September 18th was seen as the most likely day for a potential tapering announcement
• But the Fed decided to keep a change in QE amounts on hold until the economy could more convincingly show that rising rates (which had been rising because markets expected the Fed to taper!) wouldn’t be too big an impediment to further improvement.
• The Fiscal drag is also a consideration for the Fed and we believe this to be one of the factors preventing rates from rising more quickly
• Rates moved lower after the Fed held off on tapering, but the window of opportunity may be closing.  Ultimately, that will depend on the economic data that’s on hold due to the shutdown
• (As always, please keep in mind that our Best-Execution rate always pertains to a completely ideal scenario.  There are many reasons a quoted rate may differ from our average rates, and in those cases, assuming you’re following along on a day to day basis, simply use the Best-Ex levels we quote as a baseline to track potential movement in your quoted rate).

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Next Big Investment: A Million-Dollar Flip - Key West Real Estate Blog

Some investors are betting that renovating and flipping million-dollar properties is the next big opportunity in the housing market.

Investors had been mostly focused on foreclosed and distressed properties, buying them on the cheap and turning them into rental properties. But as foreclosures have dried up in many markets and competition has increased, some investment companies are turning to flipping more expensive properties, particularly in California, where limited inventories are available.

“Unlike the flippers of the housing bubble, who bought homes with little or no money down, those investors today often have to make all-cash purchases, which has reduced the pool of potential buyers,” The Wall Street Journal reports.

For example, American Coastal Properties LLC is buying up properties with what it considers “lot value”: homes with no curb appeal but that are located in exclusive neighborhoods in Southern California. ACP is spending between 50 percent to 100 percent of the purchase price in redesigning — and, in some cases, rebuilding — the homes, says ACP owner Nick Sinatra.

"It's a land trade," Sinatra says. "We're essentially higher-end home builders in highly desirable neighborhoods that, even in bad times, don't suffer."

After ACP bought a Venice, Calif., home last year for $900,000, the company sold it in June for $2.065 million. It had spent nearly $600,000 on renovations. Sinatra told the Journal that he believes flipping luxury homes offers better returns because the market for turning less-expensive homes into rentals or flips has grown “overcrowded.”

"There are fewer competitors in this space because it's more difficult," he says.

Source: “Luxury House 'Flippers' Get a Lift,” The Wall Street Journal 

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