Real Estate & Market Report: May 09, 2014
By: Fred Arnold
The good news...mortgage rates will remain low for the foreseeable future. More good news...mortgage rates have dropped to the lowest point thus far in 2014. The bad news...the economy is slowing. More bad news...the housing market seems to be stalling considerably.
Finally...the labor markets are not recovering at the pace in which the Fed had hoped. This is the quick recap of Fed Chairman Janet Yellen's speech delivered on Thursday of this week.
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Signs of economic slowing are becoming more and more pronounced. Last week the dismal report on first quarter GDP showed just how much the economy is slowing. Many of the housing reports are not nearly as robust as they were last year. The statistics in the labor markets are not nearly as positive as the headlines make them appear.
The impact of lower mortgage rates is certainly making a difference in purchase home financing. The Mortgage Bankers Association of American reported that loan applications for home purchasing surged 9.0 percent last week.
This is the largest single week jump we have seen all year. Surprisingly however is that applications for refinances only rose 2.0 percent. Historically refinances are more sensitive to mortgage rates than are purchases. It is expected that next week's application numbers for both purchase and refinances will show another increase as rates continued to decline throughout this week.
According to RealtyTrac, the use of all cash to purchases homes is currently at 43% for the first quarter of 2014. That is an increase of 19 percent from the same time last year. It is also the highest level since Realty Trac began tracking this data since the early part of 2011.
Inventory shortages as well as tight lending guidelines is providing cash buyers a competitive edge in the bidding process on homes. Sellers are more apt to accept the sure thing of a cash buyer rather than having to wait for the possibility of a purchaser having to obtain mortgage financing.
In speaking with real estate professionals from all around the country it is clear that the trend for housing is improving. Although we are not seeing the typical spring market boom with homes coming on the market for sale, there are definitely reports of more inquiries by home owners. It is creating optimism for the future in that there has been a significant increase in sellers making inquiries on finding out the value of their home.
Many agents are hearing the same words from the sellers that are making the inquiries... "We are not ready to put our house on the market just yet, however we are thinking about it". (Inquiries are definitely a positive sign for the future of housing)
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Next week's market moving reports are:
- Tuesday May 13th - Retail Sales
- Wednesday May 14th - MBA Applications, Producer Price Index & Housing Market Index
- Thursday May 15th - First Time Jobless Claims Consumer Price Index & Industrial Production
- Friday May 16th- Housing Starts
As your mortgage professional, I am happy to assist you with any information you may need regarding mortgage or real estate trends. I welcome the opportunity to serve you in any way I possibly can. Please feel free to reach me at 661-505-4300.