Michael Santos

MLB Residential Lending

Many Millennials Need More Space

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Many Millennials Need More SpaceThere are many Millennials who are looking for a home, and many of them are getting ready to trade up for more space. If you think you need more space, you may have more buying power than you realize. The coronavirus pandemic has led to a lot of changes, and you might be able to use the equity in your home to purchase a bigger house with more features.

Why Millennials Are Looking For Bigger Homes

There are a few reasons why many Millennials are looking for bigger homes. First, the coronavirus pandemic forced many people to work from home. This meant that a lot of people, including Millennials, needed a home office. In some cases, this means looking for a home with an extra room. 

In addition, many Millennials have had children during the past few years. This means they need one or two extra bedrooms, and probably another bathroom. This means moving into a home that has more space. 

Millennials Can Use The Equity In Their Homes

A lot of Millennials are still cash-strapped by student loans, but they might have more buying power than they realize. Due to the skyrocketing home prices during the past few years, Millennials may have built up a lot of equity in their homes. They can tap into this equity by selling their current houses for a significant profit. Then, they can roll this profit into a bigger house with a home office, extra bedrooms, more bathrooms, and a variety of extra features. 

How To Choose A New Home

Many Millennials are ready to use their newfound purchasing power to purchase a bigger house, but it is important to find the right one. Just because the house has more space doesn’t necessarily mean it is laid out properly. The bedrooms have to be the right size, particularly if their children are going to have a lot of toys. The home office also needs to be in a location where people will not be distracted while working. Finally, it might be beneficial to find a home office that can be used for more than one purpose. Some Millennials may be getting ready to go back to a physical office in the near future, and it would be beneficial to have a home office that can be used for different things. 

 

Case-Shiller, FHFA Post New Records for Home Price Growth

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Case-Shiller, FHFA Post New Records for Home Price GrowthS&P Case-Shiller’s National Home Price Index rose by 19.80 percent year-over-year in February and was the third-largest pace of home price growth since the National Home Price Index’s inception. The 20-City Home Price Index reported that Phoenix, Arizona held its first-place ranking with year-over-year home price growth of 32.90 percent. Tampa, Florida maintained its second-place standing with year-over-year home price growth of 32.60 percent. Miami, Florida reported year-over-year home price growth of 29.70 percent year-over-year. Home prices rose faster for all 20 cities in February than in January.

Rapid Home Price Growth Expected to Slow as Rising Mortgage Rates Take Hold

All 20 cities included in the 20-City Home Price Index posted double-digit price growth in February, but analysts cautioned that the two-month lag in reporting didn’t accurately reflect current market conditions.  Recent data on home sales and mortgage applications indicated that demand for homes is slowing due to affordability challenges caused by rapidly rising home prices and mortgage rates. Economists expect the housing market to cool as would-be home buyers face mortgage qualification and affordability challenges.

Craig J. Lazzara, managing director of S&P Dow Jones Indices, said: “The macroeconomic environment is evolving rapidly and may not support extraordinary home-price growth for much longer.” Mr. Lazzara also said that rising mortgage rates have not yet impacted home-price data, but would likely do so soon.

Selma Hepp, a  chief deputy economist at CoreLogic, said: “With diminished buying power and mortgage rates pushing above five percent in recent weeks, home- price growth is likely to take a step back in coming months.” Economists generally expect home price growth to slow as sales volume declines.

FHFA Reports  Record Home Price Growth in February

The Federal Housing Finance Agency, which oversees Fannie Mae and Freddie Mac, reported that home prices rose by 19.40 percent year-over-year; home prices for single-family homes owned by Fannie Mae and Freddie Mac rose by 1.10 percent from January to February.  FHFA reported higher home prices across all nine census divisions. Home prices grew fastest in the Mountain Division, where home prices rose by 24.30 percent year-over-year in February.

Will Doerner, Ph. D   and Supervisory Economist at FHFA’s Division of Research and Statistics, said: “House prices rose to a new historical record in February. Acceleration approached twice the monthly rate as seen a year ago. Housing prices continue to rise owing in part to supply constraints.” Rising materials costs, labor, and lot shortages continued to rein in new home construction.

What’s Ahead For Mortgage Rates This Week – February 28, 2022

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What’s Ahead For Mortgage Rates This Week – February 28, 2022Last week’s economic reporting included readings on home prices from S&P Case-Shiller and the Federal Housing Finance Agency; data on pending home sales and sales of new homes were also released. The University of Michigan released its final February reading on consumer sentiment and weekly reports on average mortgage rates and jobless claims were also published.

S&P Case-Shiller Home Price Indices: Home Price Growth Expected to Slow in 2022

December readings from S&P Case Shiller suggested a slowing pace of home price growth in 2022 but analysts said that home prices are not expected to decrease. Case-Shiller’s National Home Price Index showed an 18.80 percent increase in home prices year-over-year. S&P Case-Shiller’s 20-City Home Price Index reported that Phoenix, Arizona held on to its first-place standing for home price growth with home prices increasing by 32.50 percent year-over-year. Tampa, Florida home prices rose by 29.40 percent, and the Miami, Florida metro area reported home price growth of 27.30 percent. Analysts expect that home prices will continue to rise, but not at the extreme pace seen in 2021.

The Federal Housing Finance Agency, which oversees properties owned and financed by Fannie Mae and Freddie Mac, reported year-over-year home price growth of 17.60 percent as of December. Analysts said that January’s bad weather, rising mortgage rates, and continued impacts of  Covid-19 and its variants decreased sales of new homes by 9.30 percent in January. The National Association of Realtors® reported supplies of available homes were in the normal range with a 6.1-month supply of homes available. A six-month supply of available homes is considered an average inventory.

Mortgage Rates, Jobless Claims

Freddie Mac reported lower average rates for fixed-rate mortgages as the average rate for 30-year fixed-rate mortgages fell by three basis points to 3.89 percent; rates for 15-year fixed-rate mortgages dropped one basis point to an average of 3.14 percent. Rates for 5/1 adjustable-rate mortgages were unchanged at 2.98 percent. Discount points averaged 0.80 percent for 30-year fixed-rate mortgages and 0.70 percent for 15-year fixed-rate mortgages. Discount points for 5/1 adjustable-rate mortgages averaged 0.30 percent.

Initial jobless claims were lower last week with 232,000 new claims filed as compared to the prior week’s reading of 249,000 initial claims filed. Analysts expected 235,000 new jobless claims to be filed last week. 1.48 million continuing jobless claims were filed last week as compared to the prior week’s reading of 1.59 million continuing jobless claims filed.

What’s Ahead

This week’s scheduled economic reading includes data on construction spending, public and private sector jobs, and the national unemployment rate. Weekly reports on mortgage rates and jobless claims will also be released.

S&P Case-Shiller Indices: December Home Price Growth Hits Record High

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S&P Case-Shiller Indices: December Home Price Growth Hits Record HighWhile U.S. home prices grew at record speed in December, rising mortgage rates threatened rapid price appreciation as buyers were sidelined by affordability concerns. S&P Case-Shiller’s National Home Price Index reported 18.80 percent year-over-year home price growth in December.

The 20-City Home Price Index posted a year-over-year gain of 18.60 percent as compared to November’s year-over-year home price gain of 18.30 percent. Home prices rose by 1.50 percent from November to December 2020. Phoenix, Arizona held on to first place in the 20-City Index with year-over-year home price growth of 32.50 percent; Tampa, Florida held second place with 29.40 percent year-over-year home price growth. The Miami, Florida metro area held third place with year-over-year home price growth of 27.30 percent.

Rising Mortgage Rates Impact Affordability for Prospective Homebuyers

Analysts predicted slowing home price growth as mortgage rates rise and affordability issues impact prospective home buyers. Danielle Hale, a chief economist at Realtor.com, said: “Home prices continued to surpass expectations in December, but a marked change may be ahead for growth as rising mortgage rates eat into buyers’ purchasing power.”

Ms. Hale described a trend that could signal slower home price growth. “While typical asking prices continue to accelerate, the pace of median sales price growth has slowed, signaling a potential gap between what buyers are willing and able to pay and what sellers are hoping to receive.”

The quarterly report issued by the Federal Housing Finance Agency supported trends evident in the S&P Case-Shiller Home Price Indices. Prices for homes owned or financed by Fannie Mae and Freddie Mac rose by 17.50 percent year-over-year in December. The FHFA reported the strongest home price growth in Arizona, Utah, and Idaho during the fourth quarter of 2021.

The strongest state housing markets for  FHFA were Arizona, Utah, and Idaho, while the weakest housing markets were in Washington, DC, Louisiana, and North Dakota. Homebuyers continued to seek homes in less congested suburban and rural areas due to rising home prices. This trend originally started as Covid-19 outbreaks and work-from-home opportunities prompted city dwellers to relocate to areas less affected by the virus.

Analysts recognized that rising home prices sidelined moderate-income and first-time homebuyers, but did not expect home prices to fall in the coming months.

Case-Shiller: Home Price Growth Slows in November

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Case-Shiller: Home Price Growth Slows in NovemberS&P Case-Shiller Home Price Indices reported slower home price growth in November. Rising mortgage rates and high home prices sidelined first-time and moderate-income buyers and investors who fear buying at the peak of today’s housing markets only to face lower home values when home prices cool off.

November’s National Home Price Index reported a year-over-year gain of 18.80 percent in home prices year-over-year. The 20-City Home Price Index, which, real estate pros frequently use to estimate home pricing trends, reported that U.S. home prices rose 18.30 percent year-over-year in November.

20-City Home Price Index: Arizona and Florida Post Top Gains in Home Prices

Home prices in the Phoenix, Arizona metro area rose by 32.2 percent year-over-year in November. Tampa, Florida followed with year-over-year home price growth of 29.0 percent. Miami, Florida held third place in the Case-Shiller 20-City Home Price Index with year-over-year home price growth of 26.6 percent.

The covid pandemic influenced home buying trends in multiple ways. Closures of workspaces, loss of childcare options and local restrictions and regulations designed to prevent the spread of covid caused many people to seek alternatives to commuting to work. Working from home allowed homeowners to transition from daily commutes to work to buying bigger homes to accommodate changing family and work needs.

Covid influenced many home buyers to look for homes in less-congested metro areas; Metro areas in the mountain west have grown as buyers from congested coastal metro areas bought homes in less populated areas in states including Arizona, Colorado, and Idaho.

Rising Home Prices and Mortgage Rates Impact Affordability

Rapidly rising home prices, buyer competition, and higher mortgage rates continued to challenge first-time and moderate-income home buyers, but demand for homes remains high. Analysts expect high demand and short supplies of available homes will continue to dominate housing markets in 2022.

The Naples, Florida metro area held first place in a survey of emerging housing markets; the North-Port, Sarasota, and Bradenton, Florida metro areas held second place in emerging markets. International buyers and vacation rentals are driving home sales as covid-related travel restrictions are lifted.

Metro areas including Raleigh, North Carolina, and Fort Wayne, Indiana held their own among popular vacation destinations. Foreign-born home buyers are returning to U.S. housing markets from covid-related travel restrictions. Danielle Hale, the chief economist at Realtor.com, said: “The idea that people are traveling more and that borders are a little bit more open than they were gives  international buyers the confidence to get [into the housing market.] We do see an increase in international shopping within a lot of these areas.”

Emerging real estate markets and recovery of formerly stable housing markets indicate that the worst effects of the pandemic are easing but the quick spread of covid’s omicron variant suggests that complete economic recovery from the pandemic is a gradual process. 

What’s Ahead For Mortgage Rates This Week – January 24, 2022

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What's Ahead For Mortgage Rates This Week - January 24, 2022Last week’s economic reports included readings from the National Association of Home Builders on housing markets, Commerce Department data on building permits issued, and housing starts. The National Association of Realtors® reported on sales of previously-owned homes. Weekly reports on mortgage rates and jobless claims were also released.

National Association of Home Builders: Builder Confidence Falls One Point

Supply chain issues and rising inflation concerned builders surveyed about housing market conditions in January. The National Association of Home Builders reported an index reading of 83 as compared to December’s reading of 84. While any reading over 50 is considered positive, January’s dip in builder confidence was the first decline in four months.

Component readings for the Housing Market Index also showed a slowing trend. Builder confidence in current housing market conditions was unchanged at an index reading of 90; builder confidence in housing market conditions over the next six months fell two points to 83. Builder confidence in buyer traffic in new single-family housing developments also fell by two points to 69.

NAHB Chairman Chuck Fowke said, “NAHB analysis indicates the aggregate cost of residential construction materials has increased almost 19 percent since December 2020.” Softwood lumber prices rose approximately 85 percent in the last three months according to trade publication Random Lengths. Analysts said that tariffs and labor shortages have also added to the cost of residential home building.

Commerce Department readings on building permits issued and housing starts were higher in December/ 1.87 million building permits were issued on a seasonally-adjusted annual basis as compared to November’s reading of 1.72 million building permits issued. Housing starts also increased with 1.70 million starts reported as compared to November’s reading of 1.68 million housing starts. Analysts expected a seasonally-adjusted annual reading of 1.65 million single-family starts.

The National Association of Realtors® reported December’space of 6.18 million previously-owned homes sold on a seasonally-adjusted annual basis. Analysts expected 6.48 million sales, which matched November’s reading.

Mortgage Rates, Jobless Claims Rise

Mortgage rates rose last week as the average rate for 30-year fixed-rate mortgages rose by 11 basis points to 3.56 percent. The average rate for 15-year fixed-rate mortgages was 17 basis points higher at 2.79 percent. Rates for 5/1 adjustable rate mortgages averaged 2.60 percent and 31 basis points higher. Discount points averaged 0.70 percent for 30-year fixed-rate mortgages, 0.60 percent for 15-year  fixed-rate mortgages. Basis points for 5/1 adjustable rate mortgages averaged 0.30 percent. Rising mortgage rates, high demand for homes, and buyer competition continued to present challenges for first-time and moderate-income home buyers. 

286,000 initial jobless claims were filed last week and exceeded expectations of 225,000 new claims filed and the prior week’s reading of 231,000 first-time claims filed. 1.64 million continuing claims were filed as compared to the previous week’s reading of 1.55 million ongoing claims filed. 

What’s Ahead

This week’s scheduled economic reporting includes readings from S&P Case-Shiller Home Price Indices, the Federal Reserve’s Federal Open Market Committee statement, and Fed Chair Jerome Powell’s press conference. Readings on pending home sales, inflation, and consumer sentiment are also expected Weekly readings on mortgage rates and jobless claims will also be released.