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In our Columbia SC Real Estate News for November 2014:
Pending Columbia SC Home Sales Up Slightly in September
Pending Columbia SC home sales ticked up slightly in September after dropping in August, as it remained difficult to qualify for mortgage financing.
Nationwide, The National Association of Realtors' Pending Homes Sales Index, which is based on contracts signed for previously-owned homes, rose 0.3 percent over the past month to 105. Signings of existing homes were higher in September than year-ago levels, the first time in 11 months that year-over-year contracts have risen.
Housing supply for existing homes was up in September six percent from a year ago, which is preventing prices from rising at the accelerated clip seen earlier this year.
Tight credit and price increases through the middle of 2013 have limited buying activity. About 15 percent of the real estate agents surveyed for the index said they couldn't close deals because many buyers were unable to obtain a mortgage.
Pending Columbia SC home sales are a barometer of future purchases. A one- to two-month lag usually exists between a contract and a completed sale.
Ahead of next week's congressional election, the affordability woes even have something of a political tinge, according to new analysis by the real estate data firm Trulia.
In heavily Democratic communities, the median price for a home costs $227 per square foot. That's nearly double the price of $119 per square foot in areas that vote Republican. This has encouraged Democrats to loosen lending standards, while Republicans have largely opposed such measures for encouraging consumers to become highly leveraged.
When the Securities and Exchange Commission voted 3-2 recently to adopt new mortgages rules, the two Republican commissioners, Daniel Gallagher and Michael Piwowar, opposed adoption.
Because Democratic housing markets "are less affordable, have lower homeownership, and have greater income inequality, political leaders in Democratic-leaning and Republican-leaning metros may push for different policies," according to Jed Kolko, chief economist at Trulia.
Be sure to get out and vote on Tuesday!
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Columbia SC Mortgage Rates and Requirements
Columbia SC mortgage rates remain near historic lows, at or around 4 percent, give or take a fraction up or down.
Freddie Mac says the average rate on a 30-year fix in the week ending Oct. 30 was 3.95 percent, up from 3.92 percent the previous week. They're still near the lowest 30-year rates since June 2013. The record low for 30-year rates was 3.31 percent in late 2012.
As we continue to say each month when updating the Columbia SC mortgage rates here, if you're close to closing on a home, or have tight debt ratios/cash to close, lock in your rate and don't look back!
Meanwhile, Fannie Mae, Freddie Mac and their regulator the Federal Housing Finance Agency are close to an agreement that would allow them to buy mortgages made to borrowers with less-than-pristine credit and for purchases with as little as 3 percent down. The agreement would provide lenders who sell mortgages to Fannie and Freddie protections against later charges that they had knowingly made bad loans.
Critics warn that looser credit standards and lower down payments will only lead the industry into another crisis of borrowers unable to make payments, or homes that slip too easily underwater.
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Bond Tapering is Officially Over
Bond tapering is now officially over. The Federal Open Market Committee (FOMC) officially decided to conclude its more than two-year-old asset purchase program earlier this week due to the substantial improvement in the outlook for the labor market and strength in the broader economy.
The Fed's decision to end its third round of bond buying had been expected. It has gradually pared the purchases from $85 billion in Treasury and mortgage bonds each month to $15 billion. And the Fed had said it would likely end the program after its October meeting if the economy continued to improve, which they say it has.
Supporters have said the bond buying helped invigorate the economy and reduce the unemployment rate, which peaked at 10 percent during 2009, to the current 5.9 percent.
The Zero Interest Rate Policy, on the other hand, remains in full effect. The federal funds rate will maintain the current 0 to 1/4 percent target range.
The Fed has said it won't begin selling its holdings until after it starts raising short-term rates.
Most economists have predicted that the Fed's first rate hike won't occur until next summer. Some foresee no increase until fall, in part because of fears that the global economy is weakening and could threaten the U.S. economy.
Former Federal Reserve Chairman Alan Greenspan said he doesn't think the Fed can unwind years of extraordinary stimulus without causing turmoil in financial markets.
We'll be watching the markets closely for you to see how the end of the bond tapering will affect interest rates and mortgage availabilities going forward.
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In our Columbia SC Real Estate News for October 2014:
Pending Columbia SC Home Sales Slip in August
Pending Columbia SC home sales slid backwards in August after improving in July, underscoring the unsettled state of the residential real estate market.
Nationwide, The National Association of Realtors' Pending Homes Sales Index, which is based on contracts signed for previously-owned homes, fell 1 percent in August from July and is 2.2 percent lower than August 2013. Pending sales mirrored a drop in settled purchases of previously-owned homes during the month. Those settlements were for contracts signed earlier in the year.
The pullback of pending Columbia SC home sales in August followed a 3 percent gain in July. The July advance numbers had improved on June's 1 percent decline after three months of gains in March, April and May.
Some blame August's decline on the market's improvement since the Great Recession. NAR chief economist Lawrence Yun said, "Fewer distressed homes at bargain prices and the acknowledgement we're entering a rising interest rate environment likely caused hesitation among investors last month. With investors pulling back, the market is shifting more towards traditional and first-time buyers who rely on mortgages to purchase a home."
Those first-time buyers may face higher mortgage rates in coming months, but they aren't out of reach just yet. Speaking of mortgage rates and how they may affect Columbia SC home sales…
Columbia SC Mortgage Rates Near 3-Week Lows
Columbia SC mortgage rates have fallen to the lowest levels since September 9th.
According to the Primary Mortgage Market Survey released by Freddie Mac, average fixed-rate mortgage rates decreased slightly, a week after making their biggest one-week gain of the year.
30-year fixed-rate mortgages (FRMs) averaged 4.20% with an average 0.5 point for the week ending September 25, 2014, down from last week when they averaged 4.23%. A year ago at this time, 30-year FRMs averaged 4.32%.
15-year FRMs this week averaged 3.36% with an average 0.5 point, down from last week when they averaged 3.37%. A year ago at this time, 15-year FRMs averaged 3.37%.
Tomorrow, the jobless claims figures come out. New unemployment claims are compiled weekly to show the number of individuals who filed for unemployment insurance for the first time. These numbers could impact Columbia SC mortgage rates if the job numbers are not in line with expectations.
As we said last month when updating the Columbia SC mortgage rates here, if you're close to closing on a home, or have tight debt ratios/cash to close, lock in your rate and don't look back!
Columbia SC Home Price Gains See Significant Slowdown
Columbia SC home price gains saw their smallest annual gains since late 2012 in July.
The 20-city S&P/Case-Shiller index released yesterday (September 30) indicates that prices rose 6.7 percent in July from a year earlier. That is the smallest year-over-year increase since November 2012. It's also a continuation of a slowdown in Columbia SC home price gains.
The report indicates that as of July, average home prices are back to autumn 2004 levels.
While the year-over-year figures are trending downward, Columbia SC home price gains are still rising month-to-month, although at a slower rate than what we are used to seeing over the past couple of years. Home prices are still rising two or three times the rate of inflation, said David Blitzer, chairman of the Index Committee at S&P Dow Jones Indices.
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In our Columbia SC Real Estate News for September 2014:
Columbia SC Home Sales Outlook Stronger
Economists are more optimistic about the outlook for Columbia SC home sales over the next two years due to stronger job creation.
The annual pace of existing home sales nationwide will likely rise to 5.25 million units in the first three months of 2015 from 5.09 million in the current quarter, according to the Reuter's poll median forecast.
In May, economists expected much slower gains, with 5.1 million resales expected in the first quarter of next year.
Americans signed more contracts in July to buy previously-owned homes than in any month in almost a year, suggesting the housing market was pulling out of its slump more quickly than expected.
The National Association of Realtors (NAR) said last week that its Pending Home Sales Index, based on contracts signed last month, rose 3.3 percent to 105.9, the highest level since August 2013.
Low mortgage rates and improving labor market dynamics should remain conducive to gradual growth in the Columbia SC home sales sector.
A sharp increase in mortgage rates pushed sales of existing homes lower in the second half of 2013 but borrowing costs have been more stable in recent months and Columbia SC home sales have recovered some of the lost ground.
Investors and economists polled by Reuters generally expect the Federal Reserve will begin to slowly increase its benchmark interest rate around the middle of next year after holding it near zero since 2008.
The median forecast put the 30-year mortgage rate at 5.25 percent in 2016, down from 5.68 percent in the May poll. Last week, the 30-year rate averaged 4.28 percent, according to the Mortgage Bankers Association.
Economists don't believe a slow rise in mortgage rates will hurt Columbia SC home sales, as slow increases in rates are generally considered a symptom of an improving economy. At the same time, slowly rising rates may also help to bring home price appreciation back down to more sustainable levels.
Speaking of mortgage rates and how they may affect Columbia SC home sales…
Columbia SC Mortgage Rates Remain Low
Columbia SC mortgage rates remain much lower than anyone expected they would be by this time when the Fed announced it would start cutting back on its purchases of mortgage bonds.
Mortgage News Daily reports that average 30-year fixed mortgage rates are down to around 4.11 percent. One year ago those same rates were 4.61 percent, down about 50 basis points year-over-year.
Mortgage refinancing tends to pick up anytime mortgage rates drop by 50 bps from recent levels, however most homeowners who were looking to refinance did so when rates were below 4 percent in 2012 and 2013.
We would not be surprised to see rates drift even lower in the coming few days or weeks as they pull lower due to global events, European debt, etc. These are the largest rate indicators right now that are affecting Columbia SC mortgage rates.
Columbia SC mortgage rates were well above 6 percent during the housing market's 2006-2007 peak. Freddie Mac data going back more than four decades shows 30-year rates hit an all-time low of just 3.31 percent in November 2012.
Trying to decide whether to lock in current Columbia SC mortgage rates or let them float a while longer? Seems odd to say floating is an option when we're near the best pricing of the year, but it might be a consideration for aggressive borrowers. If you're close to closing, or have tight debt ratios/cash to close, lock 'em up, and don't look back!
Ideal Time to Buy a Columbia SC Home?
If you've been waiting to buy a Columbia SC home when the time was just right, that time may be now.
Potential homebuyers who have been willing to wait for better deals are starting to be rewarded for their patience, as sellers drop listing prices to meet buyers' more value-focused expectations.
Redfin Chief Economist Nela Richardson says, "Two market developments in July are spurring this change in housing activity as the market transitions from the summer to the fall buying season.”
1 – Columbia SC Home Price Slowdown
Home price growth was mostly flat in July for the first time in five months.
As Senior Financial Reporter Trey Garrison said last week, home price growth has slowed across the board, and Capital Economics says the slowdown will likely meet the company's forecast for inflation to slow to 4% in 2015.
Just about everyone was a little surprised by the consecutive month-on-month declines in house prices during April, May and June on the new monthly Case-Shiller national measure. Echoing that message, the Case-Shiller 20-City measure of house prices fell during the latest two months.
2 – End of Seller's Market?
The second market development is a shift in pricing power from sellers to a more balanced market. That shift has been nearly nine months in the making from when sales began to first decline last November.
Back in October, sellers were starting to lose their dominance in the market, with 72% of surveyed agents describing now as a good time to sell compared to 86% in the second quarter of 2013.
Look for these two trends to drive an unusual surge in home sales this fall. We also look for prices to continue to flatten, and to potentially decline month over month in September or October. If that happens, it will be the first three-month price decline since the fall 2012. Stay plugged in right here and we'll keep you posted on trends as we move through the fall Columbia SC home buying season and into the holidays.
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Columbia SC Housing is Faced With Cautious Optimism
Columbia SC housing is facing cautious optimism with mixed signals coming in from several economic reports and surveys.
According to the July 2014 U.S. Economic Housing Outlook released recently by Freddie Mac, residential fixed investment fell 4 percent in the first quarter. Housing starts for June fell by 9.3 percent from the May pace. After adding to economic growth in 2012 through mid-2013, housing activity has slowed and is no longer driving the economic recovery. The American public seems less sure that the economy is headed in the right direction.
“Although the economic news for the first half of 2014 has been bittersweet, there is good news to share as we head into the latter half of summer,” according to Frank Nothaft, Freddie Mac vice president and chief economist. “In particular, employment was up by nearly 1.4 million during the first six months and this will bolster household formations, resulting in positive gains most immediately for the rental housing market and then, longer term, for single-family home sales.”
Pending home sales dipped in June following three months of increases. The National Association of Realtors Pending Home Sales index, which is based on contract signings, fell 1.1 points to 102.7 last month. That’s 7.3 points below June 2013’s level, but it’s still above 100, the indicator for average contract activity.
“The multifamily rental market has led the rest of the housing sector into recovery, and about one-third of housing starts in the first quarter were for multifamily rental apartments. There’s no question the single-family recovery is moving slowly, but it continues to doggedly press forward and we are cautiously optimistic.”
Cautious optimism is probably the correct position to take when evaluating the current state of the economic climate. But for the American people, the mixture is much more caution than optimism.
A survey recently conducted by Rasmussen Reports found that only 19 percent of consumers rate the U.S. economy positively, including four percent (4%) who rate it as excellent. Forty percent (40%) rate it as poor. Additionally, consumer sentiment is also down to its lowest point in months.
The June 2014 REALTORS® Confidence Index (RCI) Report indicates that REALTORS® had a slight dip in confidence about current and future market conditions in June across all markets, not just the Columbia SC housing market. Low supply of homes relative to demand, the challenging credit environment, and the continued slow pace of income and job growth were cited as the major factors constraining sales. Given the demand-supply imbalance, home prices generally continued to increase, and properties were on the market for fewer days for the sixth straight month.
A strong third quarter could do much to improve the psyche of the consumer as well as Columbia SC housing. Stay tuned… we’ll keep you updated.
Home Improvement Spending Expected to Slow
The home improvement component of the housing market, measured by the dollars consumers spend to update their homes, is expected to peak during the second half of 2014, and then begin to ease heading into next year.
Revised estimates from the U.S. Census Bureau show the home improvement market grew 5.6 percent in 2013. For 2014, the Leading Indicator of Remodeling Activity (LIRA) projects annual gains in home improvement spending of 9.9 percent, with annual growth slowing to 7.0 percent in the first quarter of 2015.
“With the economy improving slower than expected and home sales struggling to keep up with last year’s pace, the recent strong gains in remodeling spending will likely moderate later this year,” says Chris Herbert, Research Director at the Joint Center. “Although this presents a challenge for the remodeling industry, the LIRA continues to project significant growth going into 2015.”
The rest of the housing market is giving mixed signals, including low inventories, prices out of reach for some and tight credit for others.
Existing home sales climbed 2.6 percent to a seasonally-adjusted annual rate of 5.04 million in June, the highest pace since October 2013. But the Commerce Department reported recently that new home sales for June plummeted by 8 percent.
Columbia SC Mortgage Rates Hover Near Low for the Year
Average Columbia SC mortgage rates declined slightly this past week, and are hovering near their lows for the year.
Mortgage company Freddie Mac said the nationwide average for a 30-year loan slipped to 4.12 percent from 4.13 percent last week. The average for the 15-year mortgage, a popular choice for people who are refinancing, declined to 3.23 percent from 3.26 percent last week.
Columbia SC mortgage rates are below the levels of a year ago. They have fallen in recent weeks after climbing last summer when the Federal Reserve began talking about reducing the monthly bond purchases it was making to keep long-term borrowing rates low.
The Fed issued a statement this week after a two-day policy meeting suggesting that it wants to see further improvement in the economy before it starts raising its key short-term interest rate. The central bank offered no clearer hint of when it will raise that rate, which is at a record low near zero.
Home prices rose in May from a year earlier at the weakest pace in 15 months, data released this past week showed, as sales remain modest.
At 4.12 percent, the rate on 30-year Columbia SC mortgage rates is down from 4.53 percent at the start of the year. Rates have fallen even though the Fed has been trimming its monthly bond purchases. The Fed said this week that it will slow the pace of its purchases by another $10 billion to $25 billion a month. The purchases are set to end in October.
To calculate average Columbia SC mortgage rates, Freddie Mac surveys lenders across the country between Monday and Wednesday each week. The average doesn’t include extra fees, known as points, which most borrowers must pay to get the lowest rates. One point equals 1 percent of the loan amount.
- The average fee for a 30-year mortgage was 0.6 point, unchanged from last week. The fee for a 15-year mortgage rose to 0.7 point from 0.6 point last week.
- The average rate on a five-year adjustable-rate mortgage increased to 3.01 percent from 2.99 percent. The fee remained at 0.5 point.
- For a one-year ARM, the average rate edged down to 2.38 point from 2.39 percent. The fee held at 0.4 point.
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Are We Facing Another Columbia SC Housing Bubble?
By most accounts, Columbia SC housing is on the rebound – sales are up, prices are up, building permits and starts are up, and confidence is also up. (See our next article about "Housing Coming Out of its Recent Slump")
But should we all be getting ready for the next round of the sky falling when it comes to Columbia SC housing?
Trulia doesn't think so. In fact, their Chief Economist, Dr. Jed Kolko says that Columbia SC housing is, on average, actually undervalued by around 3 percent. This means that in conjunction with a variety of other factors, the Columbia SC housing sector isn't so hot that it's facing a bubble. If homes were selling for well over their worth, we'd have a worry, but Dr. Kolko says we're leveling out and are not on the verge of another Columbia SC housing bubble.
More good news from Trulia is the fact that builders are not overbuilding, meaning there won't be another glut of Columbia SC housing that just sits there, dragging down the market. In addition, lenders are not over-lending, meaning the era of no-doc loans is officially over. To the contrary, the difficulty for some people to get approved who should actually qualify is another reason to feel safe that we're not on the verge of another bubble, despite rising home prices.
If you're on the fence about buying a home now and concerned about pricing, sooner is probably better for your wallet than later. Prices are rising, albeit slowly. That's a good thing, for buyers AND sellers. It means no bubble is in our future for Columbia SC housing.
Is Housing Coming Out of its Recent Slump?
Home resales rose more than expected in May and the inventory of properties for sale was the highest in more than 1-1/2 years, according to the National Association of Realtors.
The NAR reports that toal home resales, which are completed transactions of single-family homes, townhomes, condominiums and co-ops, rose 4.9 percent to a seasonally adjusted annual rate of 4.89 million in May. That's from an upwardly-revised 4.66 million in April, but remain 5.0 percent below the 5.15 million-unit level in May 2013.
The 4.9 percent month-over-month gain in May was the highest monthly rise since August 2011 (5.5 percent).
Total housing inventory at the end of May climbed 2.2 percent to 2.28 million existing homes available for sale, which represents a 5.6-month supply at the current sales pace, down slightly from 5.7 months in April.
Unsold inventory is 6.0 percent higher than a year ago, when there were 2.15 million existing homes available for sale.
The median existing-home price for all housing types in May was $213,400, which is 5.1 percent above May 2013.
In June, NAR reported new home construction activity is currently insufficient in most of the U.S., and some states could face persistent housing shortages and affordability issues unless housing starts increase to match up with local job creation.
Columbia SC Mortgage Rates Lower Than a Year Ago
Columbia SC mortgage rates are now lower than a year ago when rates jumped in the initial anticipation of the Federal Reserve's tapering of bond purchases.
What does this mean for the average consumer looking to buy a home? Rates are holding near the 4 percent mark, a still historically low range. The all-time low for the 30-year fixed was set in November 2012 at 3.31 percent, according to Freddie Mac.
This week, the 30-year fixed rate mortgage slipped to 4.14 percent, from 4.17 percent the previous week. But more telling is the comparison to a year ago, when the benchmark home loan stood at 4.46 percent and re-financing slowed considerably from its heady days of 2011-2012.
Here is Freddie Mac's overview of rates for the week:
30-year fixed-rate mortgage (FRM) averaged 4.14 percent, with an average 0.5 point for the week ending June 26, 2014, down from last week when it averaged 4.17 percent. A year ago at this time, the 30-year FRM averaged 4.46 percent.
15-year fixed-rate mortgage (FRM) this week averaged 3.22 percent, with an average 0.5 point, down from last week when it averaged 3.30 percent. A year ago at this time, the 15-year FRM averaged 3.50 percent.
5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 2.98 percent this week, with an average 0.3 point, down from last week when it averaged 3.00 percent. A year ago, the 5-year ARM averaged 3.08 percent.
1-year Treasury-indexed ARM averaged 2.40 percent this week, with an average 0.4 point, down from last week when it averaged 2.41 percent. At this time last year, the 1-year ARM averaged 2.66 percent.