Central Mass. Real Estate Blog

Information to Inform and Entertain! Updated Daily! Jon Lacob RE/MAX 300

Fed Minutes Edge Mortgage Rates Higher

Oct 13

Posted by jlacob in FOMC Minutes | No Comments

FOMC September 2010 MinutesThe Federal Reserve released its September 21, 2010 meeting minutes Tuesday afternoon. Mortgage rates in Massachusetts are slightly higher today.

It’s unwelcome news for this season’s home buyers, and existing homeowners with plans to grab lower rates. Mortgage rates made new lows last week and may have reached a turn-around point.

The “Fed Minutes” is published 8 times annually, and is the official meeting recap for the Federal Open Market Committee. Similar to the meeting minutes released after a corporate conference or condo association gathering, the Fed Minutes details the conversation and debate between meeting attendees.

Minutes are the lengthy companion to the Fed’s brief, post-meeting press release.

Because of its content, the Fed Minutes is closely read by Wall Street and economists. It’s insight into the talk that shapes our nation’s monetary policy and, within the text, there’s often clues about the Fed’s next move.

Here’s some of what the Fed discussed last month:

  • On inflation : It’s running at lower-than-optimal levels
  • On housing : Post-tax credit, housing stalled in July
  • On stimulus : The Fed may intervene in open markets within the next few months

 

The over-riding theme within the minutes was that the U.S. economy is growing a steady pace, albeit slower than what’s optimal. The Fed is prepared to push things along if the economy slows further and news like that is helping stock markets.

Bond markets are losing. Rates are rising.

For now, mortgage rates hover near all-time lows.  If you haven’t locked a mortgage rate yet, your window may be closing.  Once the economy turns around for certain, mortgage rates will be among the first of the casualties.

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Homeowner Maintenance : Twice-Annual Gutter Cleaning

Oct 12

Posted by jlacob in Home How To | No Comments

Clean your gutters twice annuallyGutters are designed to funnel rainwater away from a home. Properly working gutters help keep a home’s basement from filling with water, and protect a home’s foundation from long-term, structural damage, and keep a roof in tip-top shape.

In other words, keeping clean gutters is essential for homeowners. Thankfully, gutter maintenance can be a do-it-yourself job.

There are four main steps in gutter cleaning, summarized cleanly in this 4-minute video from Lowe’s.

  1. Gather your tools. You’ll need a ladder, a bucket, a hose, and a trowel.
  2. Scoop large debris from the gutter, using the trowel for hard-to-reach places smaller sticks and leaves
  3. Flush the gutters using a garden hose and spray attachment
  4. Remove clogs in the downspout and check for proper sloping

Gutter maintenance is a twice a year task and the Lowe’s video offers helpful safety tips, too.  Of course, if you’re uncomfortable on a ladder, or prefer to hire a professional, reach out to me anytime.

I’m happy to make a local gutter-cleaning recommendation.

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Jobs Data Shows Private Sector Growth, Hints At Lower Mortgage Rates

Oct 8

Posted by jlacob in Jobs | No Comments

Net Job Gains Oct 2008 - Sept 2010On the first Friday of each month, the Bureau of Labor Statistics releases its Non-Farm Payrolls report from the month prior.  This month, though, because the first Friday of the month was also the first day of the month, the report was delayed one week.

The report hit the wires at 8:30 AM ET this morning.

More commonly called “the jobs report”, the government’s non-farm payrolls data influences stock and bond markets, and, in the process, swings a big stick with home affordability figures in Worcester and nationwide.

Especially in today’s economic climate.

Although the recession has been deemed over, Wall Street remains unconvinced. Data fails to show the economy moving strongly in one direction or the other and, absent job creation, economists believe growth to be illusionary.

Consider:

  1. With job creation comes more income, and more spending.
  2. With more spending comes growth in business
  3. With growth in business comes more job creation

And the cycle continues.

The prevailing thought is that, without jobs, consumer spending can’t sustain and consumer spending accounts for two-thirds of the economy. No job growth, no economy recovery.

But there’s another angle to the jobs report, too; one that connects to the housing market. As the jobs market recovers, today’s renters are more likely to become tomorrow’s homeowners, and today’s homeowners are more likely to “move-up” to bigger homes. This means more competition for homes at all price points and, therefore, higher home values.

And that brings us to today’s jobs data.

According to the government, 95,000 jobs were lost in September. Economists expected a net loss of 5,000.  However, if public sector jobs are excluded from the final figures, jobs grew by 64,000.  This is a positive for the private-sector, but still trailed expectations.

Wall Street is voting with its dollars right now and mortgage bonds are gaining, improving mortgage pricing.

So, although the September 2010 jobs report doesn’t reflect well on the economy overall, home affordability in Massachusetts and around the country should improve as a result. 

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Fannie Mae Rolls Out New Lending Rules December 13, 2010

Oct 7

Posted by jlacob in Mortgage Guidelines | No Comments

Fannie Mae changes mortgage guidelinesStarting Monday, December 13, 2010, Fannie Mae is changing its mortgage lending guidelines.

For some mortgage applicants of Massachusetts , the loan approval process will simplify. For others, it will toughen. How you’ll be affected personally will depend on your credit profile and your loan characteristics.

Among the biggest changes from Fannie Mae is a new set of guidelines for gift funds. When the new rules roll out, accepting cash gifts for downpayment will be easier.

Undetr the new guidelines, buyers of owner-occupied, 1-unit properties (i.e. single-family homes, condos, townhomes) can forgo Fannie Mae’s typical, minimum 5% personal downpayment contribution. Downpayments on homes meeting the above criteria can be comprised of 100% gifted and/or granted funds.

Buyers of second homes and multi-unit properties, however, are not exempt.

There’s also two changes pending with respect to revolving debt.

  1. Debt with less than 10 payments remaining may no longer be waived in debt-to-income ratio calculations
  2. Debt lacking a monthly payment on credit must be assigned a payment equal to 5% of the outstanding balance

Both of the above should increase the number of loan denials in 2011.

And, lastly, Fannie Mae changes some of its documentation requirements, the most noticeable of which will be with respect to income verification. Salaried workers and applicants whose commission/bonus accounts for less than a quarter of their income will have fewer paystubs to produce for underwriting.

Loan applications taken prior to December 13, 2010 are exempt from the new rules.

Fannie Mae’s complete guideline changes are available online at http://efanniemae.com.

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2011 Conforming Loan Limits : No Change From 2010

Oct 6

Posted by jlacob in Mortgage Guidelines | No Comments

Conforming loan limits 2011

Conforming mortgages is so named because, literally, they conform to the mortgage guidelines set forth by Fannie Mae and Freddie Mac.

Of the many traits of a conforming mortgage, one is “loan size” and loan sizes have limits. Mortgages exceeding this loan size limit cannot be securitized as a conforming mortgage and, therefore, are ineligible for conforming mortgage rates.

Conforming mortgage rates are often the cheapest source of mortgage money for residents of Massachusetts , all things equal.

Each year, the government re-evaluates its maximum allowable loan size based on “typical” housing costs nationwide. Loans in excess of this amount are often called “jumbo”.

Between 1980 and 2006, as home prices increased, so did conforming loan limits — from $93,750 to $417,000.  Since 2006, however, home prices have retreated but the conforming loan limit has not.

In 2011, for the 6th consecutive year, $417,000 will be the country’s conforming mortgage loan limit.

Conforming loan limits very by property type. The complete breakdown is as follows:

  • 1-unit properties : $417,000
  • 2-unit properties : $533,850
  • 3-unit properties : $645,300
  • 4-unit properties : $801,950

Despite the limits, some parts of the country get “loan limit exceptions”. In areas considered “high cost”, conforming loan limits range from $417,001 to $729,750. High-cost is defined by the median sales price of a region.

Los Angeles County, for example, is a high-cost region, along with a lot of California. There are less than 200 such areas nationwide, though.

You can verify your local market’s loan limit via the Fannie Mae website. A complete county-by-county list is published online.

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Pending Home Sales Data Points To Higher Home Prices This Fall

Oct 5

Posted by jlacob in Pending Home Sales | No Comments

Pending Home Sales (Feb 2009 - August 2010)Consistent with calls of a housing rebound, the Pending Home Sales Index rose again in August. It marks the second straight month of improvement after May’s post-tax credit drop-off.

A “pending home” is an existing home under contract to sell, but not yet closed.

According to the National Association of REALTORS®, 4 out of 5 pending homes close within 60 days, and many more close within 90 days. For this reason, the Pending Home Sales Index is an excellent forward-indicator for housing.

As a real-life illustration, after July’s 27% plunge to an 11-year low, Existing Home Sales recovered 8 percent in August. This was not a surprise, though, because July’s Pending Home Sales Index predicted it.

Region-by-region, the Pending Home Sales Index varied in August, suggesting better sales levels in the South and West markets:

  • Northeast : -2.9% from July
  • Midwest : +2.1% from July
  • South : +6.7% from July
  • West : + 6.4% from July

That said, real estate markets aren’t “regional” — they’re local. Just as there are improving markets within the Northeast Region, there’s worsening markets in the West. And cities like Auburn have their own market traits, too.

Overall, buyers are being drawn into housing by low mortgage rates, affordable homes, and ample supply. If the August Pending Home Sales Index is foreshadowing the fall housing market, home prices appear slated to rise.

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With The Start Of Autumn, An Easy Way To Save On Energy Bills

Oct 4

Posted by jlacob in Home Appliances | No Comments

Ceiling fans lower energy costsWith the start of autumn comes a chill in the air, plus a simple way to drop your home’s energy bill. For homeowners with ceiling fans, it’s as simple as moving a button.

In this vintage video from The Weather Channel, you’ll learn how the blades of ceiling fan are meant to work, and how they amplify a home’s heating and cooling systems. You’ll also learn the optimal settings for blade rotation, and how to reverse your room’s air flow to take advantage.

A quick “cheat sheet”:

  • When a home’s heating system is on, rotate fan blades clockwise
  • When a home’s cooling system is on, rotate fan blades counter-clockwise

Running a ceiling fan consumes a nominal amount of energy as compared to adjusting your home’s overall temperature. On a warm day, for example, running a ceiling fan creates a “windchill effect”, reducing a room’s effective temperature by 4 degrees — all with the equivalent power of a 100-watt light bulb.

On a cold day, the fan pushes hot air back from the ceiling where it tends to collect.

If your home is without ceiling fans, installing them is inexpensive and easy.  There’s videos online to walk you through the steps, or you can call a qualified electrician. Need an electricians name? Call or email me — I’m happy to offer a referral in Central Mass..

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America’s Most Expensive ZIP Codes (2010 Edition)

Oct 1

Posted by jlacob in Rankings | No Comments

Expensive ZIP codesThe value of a home is based on the basic economic principle of Supply and Demand. When the number of buyers exceeds the number of sellers, home prices rise. Conversely, when sellers outnumber buyers, home prices fall.

There’s always a opening price point for negotiation and that figure often factors in specifics like square footage, number of rooms, and finishes and amenities. Location matters, too.

On a ZIP code-by-ZIP code basis, prices can vary wildly and it’s tiny, tony 91008 — located in Duarte, California — that tops the 2010 Forbes list of America’s Most Expensive ZIP Codes. Home to fewer than 1,400 residents of Los Angeles County, the ZIP code’s median home cost is $4,276,462.

By contrast, the median home cost across all of Duarte’s ZIP codes is just $358,454.

As listed by Forbes, America’s 10 most expensive ZIP codes are:

  1. Duarte, CA (91008) : $4,276,462
  2. Atherton, CA (94027) : $4,010,200
  3. Rolling Hills, CA (92074) : $3,892,456
  4. Alpine, NJ (07620) : $3,814,885
  5. New York, NY (10014) : $3,785,445
  6. Beverly Hills, CA (90210) : $3,684,150
  7. New York, NY (10065) : $3,626,001
  8. Belvedere (94920) : $3,283,269
  9. New York, NY (10012) : $3,221,371
  10. Santa Barbara (93108) : $3,151,220

The real estate market is a local one, as evidenced by the Forbes list. Even within large cities like New York, there are areas that stand out from the pack in terms of cost and affordability and the same is true for all cities.

Therefore, when you need local market data , look past the “national statistics”.  Talk to a real estate agent with local market knowledge instead. It’s the most reliable way to get data that matters.

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As Homebuilder Confidence Stagnates, Deals Abound

Sep 30

Posted by jlacob in Homebuilders | No Comments

Housing Market Index (2000-2010)

Home builder confidence held firm this month, according to the National Association of Home Builders’ monthly Housing Market Index. September’s reading of 13 equaled a 17-month low.

The HMI is on a 1-100 scale. A value of 50 or better indicates “favorable conditions” for home builders.

Broken down, the Housing Market Index is actually a weighted composite of 3 separate surveys which measures current single-family sales; projected single-family sales; and foot traffic of prospective buyers.

None of the 3 September surveys improved from August:

  • Single-Family Sales : 13 (unchanged from August)
  • Projected Single-Family Sales : 18 (unchanged from August)
  • Buyer Foot Traffic : 9 (from 10 in August)

Builder confidence is lower in 2010 than at any point in recorded history.

For home buyers in Central Mass. , the drop in sentiment creates opportunity. With builders feeling “down”, there’s a greater likelihood for discounts and free upgrades. It can mean more house for your home buying money.

Plus, with the supply of both new and existing homes elevated, and foreclosures still hitting the market, conditions aren’t soon likely to change.

Then, couple all that with all-time low mortgage rates and monthly housing payments look as affordable as ever.

If your plans call for buying a home in the early part of 2011, you may want to consider moving up your time frame. Today’s market looks ripe for a good deal.

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Case-Shiller Shows Slowing Growth In Home Prices… Two Months Ago

Sep 29

Posted by jlacob in Case-Shiller Index | No Comments

Case-Shiller Change In Home Values June-July 2010

For the 17th straight month, the Case-Shiller Index reports that home values are rising across the United States. As compared to June, July’s prices were up by 4 percent.

However, despite the improvement, July’s Case-Shiller Index showed weaker as compared to prior months.

  • In June, just 3 cities posted year-to-year reductions in home value. In July, 10 of 20 did.
  • In June, just 1 city posted a month-to-month reduction in home value. In July, 7 of 20 did.

As a spokesperson for Case-Shiller said, values “crept forward” in July. But not that it matters — the Case-Shiller Index is a better tool for economists than it is for homeowners in Central Mass.. This is for 3 reasons.

First, the Case-Shiller Index is on a 60-day delay but real estate sales are based on prices today. A lot can change in 60 days, and it often does. Therefore, the Case-Shiller Index is a better snapshot of the former market than the current one.

Second, the Case-Shiller Index is geographically-limited. It tracks just 20 cities, ignoring some of the largest metropolitan areas in the country including Houston, Philadelphia, and San Jose. Smaller cities like Tampa are included.

And, lastly, national real estate data remains somewhat useless anyway. All real estate is local, rendering citywide statistics too broad to have any real meaning to an individual. To find out what’s happening on a neighborhood-by-neighborhood level, you can’t look to a national survey — you have to look to a local real estate agent instead.

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