Major Home Financing Changes for 2015

Wanted to buy a house, but couldn't afford it or didn't have enough of a down payment? Changes in financing will make it easier for home buyers in 2015.


3% minimum down payment now available on conventional loans (previously 5% was required) 

In an effort to open up lending, Fannie Mae and Freddie Mac announced that they will start backing mortgages with down payments of as little as 3% of the home's price.

FHA has also revamped their lending guidelines and lowered their monthly MIP from 1.35% to 0.85%

This big change should significantly lower a borrowers monthly payment allowing them to afford a more expensive home then they previously were able to.

The Dec employment report made 2014 the best employment year since 1999. The unemployment rate declined to 5.6% from 5.8% in Nov on forecasts of 5.7%. Non-farm jobs were generally expected up 245K, as reported up 252K, Nov non-farms revised from +321K to 353K and Oct revised upward by 20K. Private jobs were thought to be up 238K, as reported240K. Average hourly earnings for all employees dropped by 0.2%, the biggest since comparable records began in 2006, to $24.57 from the prior month

The other story this morning; more terrorist attacks in France. Two additional hostage situations presently happening with more deaths after the attack two days ago at a French magazine office. French police faced off with gunmen on two fronts this morning, as the suspects behind the attack on French magazine Charlie Hebdo holed up with a hostage in a printing facility north of Paris and prosecutors said another gunman took captives in a kosher grocery store. The events may be off-setting the stronger employment data this morning.

Monday's Christmas Real Estate and Mortgage rate update

HOUSTON BY NUMBERS --REAL ESTATE--

16,749 Homes currently for sale

7,933 Home Pending sale

3,557 homes sold since Dec 1st 2014

Early this morning the US stock indexes were trading better, the 10 yr note yield at 2.18% +1 bp and at 8:30 30 yr MBS price -14 bps. Holiday trading this week and next. Last week’s run up in the stock market didn’t break the rate markets, investors and traders still willing to hold treasuries, supporting MBS prices. U.S. stock-index futures better this morning after the biggest three-day jump since 2011, amid investor optimism that the Federal Reserve will continue to support the economy. Treasuries holding well amid investor optimism that inflation isn’t going increase next year.

U.S. equities jumped 5% in the past three sessions as Fed Chair Janet Yellen said the central bank will likely hold key rates near zero at least through the first quarter, even as the U.S. economy strengthens. December has been volatile to say the least; oil prices and Russia’s currency collapse took the equity market down and initially wiped out $1 trillion of value in stocks to begin the month. The fear factor evaporated quickly after the FOMC meeting a Yellen’s comments; stock indexes have recovered all those losses in the last two weeks. Equities rallied around the world after the central bank said it will be patient on the timing of a rate increase. Yellen said any spillover from the situation in Russia is likely to be small. In the meantime interest rates have held steady compared to the volatility in equities. We don’t expect equity market volatility to end anytime soon, the beginning of the year likely will start with increased volatility after the next two weeks that should cool off somewhat from recent volatile trading.

10:00 am; Nov existing home sales, expected at 520 mil from 5.26 mil, sales dropped 6.1% to 493 mil. Yr/yr up 2.1%, $205,300 average sales price +5.0% yr/yr. Based on the pace of sales there is a 5.1 month supply. At 1:00 Treasury will begin this week’s borrowing with $27B of 2 yr notes.

Looking forward; the 50% decline in the price of oil has yet to have any serious effects on the economies of the Mid-East. Huge amounts of reserves keeping those richer countries’ citizens calm but if crude doesn’t rebound next year the loss of revenues may filter to less services for people in those countries that remain unaffected so far. The Mid-East is already in serious turmoil with tribes of old rising up to reclaim lands and/or convert others to their specific tribal rules. If the Saudis, Kuwaitis, and other Persian Gulf monarchies become unable to transfer some of the oil wealth to the populous it may be next year’s geo-political story.

TBT Thursday Real Estate and Mortgage Markets

 Spring, Texas Real Estate by numbers

A new year is about to dawn—and the outlook on the housing market is definitely brighter. After all, 2014 was the best year in the U.S. economic recovery since the recession of 2008-2009.With an accelerating economic recovery fueling job and income growth, prospects are good for homeowners and would-be home buyers

Mortgage prices better early, treasury markets quiet also slightly better. At 8:30 weekly claims were in line with forecasts, down 17K to 297K. The four-week moving average, which smooth’s out the data, increased by 4,750 to 299,000. The U.S. labor market reached its longest stretch of job creation since at least World War II in October and is on pace to post the best yearly gain in employment since 1999; most low paying but markets don’t care, a job is a job as far as economists are concerned. The fact that the high majority of jobs are part-time, or low paying, or both, is reality but is best ignored by investors.

Tomorrow is employment day; cyber-data day. Estimates are unchanged form earlier this week; non-farm jobs +225K, private jobs 230K; non-farm private jobs if they match estimates would be 16K better than growth in October. Unemployment unchanged at 5.8%, average hourly earnings +0.2%.

The 10 has support at 2.30% and is holding after the volatility over the weekend that dropped the rate to 2.17%. Our models still holding slight bullish reads, however all of our studies are only marginally positive. A close over 2.32% on the 10 will turn everything bearish. We continue to believe rates are not going to increase much through the rest of this year. Much depends on consumer spending over the holidays, so far consumers are spending but not as significantly as analysts had thought so far. 

Tuesday Real Estate and Mortgage Market Update

It looks like Spring is close behind The Woodlands, but exceeds some of the national averages.

A much better open in the bond and mortgage markets this morning, even with October PPI stronger than forecasts. Oct PPI expected to be down 0.1% increased 0.2%; the core (ex food and energy) expected up 0.1% jumped 0.4%. Yr/yr PPI +1.5%, the lowest since last Feb; yr/yr core up 1.8% from +1.6% in Sept. On the surface wholesale prices are increasing, at least in Oct. The increase due to the largest gain in services since July 2013. 

Better news from Germany this morning, investor confidence increased for the first time in 11 months. In Japan, after retreating into recession on increases in taxes, the prime minister today said he would call for early elections to measure voters confidence and suspended a sale tax increase. Both the yen and euro currencies rallied this morning. Europe’s stock markets also trading better.

17 days and still counting; the 10 yr and MBS markets have not moved. The key 10 has been in a very narrow range since the end of October, trading between 2.38% and 2.30% with the majority of trades between 2.36% and 2.32%. All technical we monitor are still throwing off neutral readings. Early this morning the 10 fell to 2.30% briefly (5 minutes) but once again didn’t attract enough momentum to crack the rock-hard resistance. This kind of narrow trading usually leads to a big move once the narrow range is broken. Most economists remain confident that the 10 and mortgage rates will increase by the end of the year; the reason of course is that the Fed is going to increase rates sometime in 2015. Most of the talking head Fed officials are saying that the FF rate will be increased by the middle of 2015. We have to go with the flow now, however we have not given up on a major stock market decline soon; maybe not this year, but it is coming. 

Thursday Real Estate and Mortgage News

Inventory shrinks slightly and prices climb as the home buying frenzy continues

The fall home buying season began with gusto in Houston as sales and prices did in September what they have done for months – rose. The continued buying frenzy caused housing inventory to shrink very slightly after holding steady at a 3.0-months supply for two consecutive months. And in another scenario that has become all too familiar in this market, prices reached record one-month highs.

According to the latest monthly report prepared by the Houston Association of REALTORS® (HAR), single-family home sales totaled 6,490 units, an increase of 7.0 percent compared to September 2013. Months of inventory, an estimate of the time required to deplete the current active housing inventory based on the previous 12 months of sales activity, dipped to a 2.9-months supply from a 3.2-months supply last September. It remains well below the current national supply of 5.5 months of inventory.

The average price of a single-family home jumped 8.2 percent year-over-year to $269,440. The median price—the figure at which half the homes sold for more and half for less—rose 7.7 percent to $196,000.
September sales of all property types totaled 7,879 units, a 7.0-percent increase compared to the same month last year. Total dollar volume for properties sold soared 15.7 percent to $2 billion versus $1.7 billion a year earlier.

“As long as consumers continue to snap up homes at the current pace, replenishing our housing inventory will be a slow process,” said HAR Chair Chaille Ralph with Heritage Texas Properties. “Rental numbers were strong in September, suggesting that many would-be home buyers are continuing to go the lease route until the market bears the homes they’re looking for at the price point that suits them.”

September Monthly Market Comparison
The Houston housing market experienced across-the-board gains in September, with total property sales, total dollar volume and average and median pricing all up when compared to September 2013.

Month-end pending sales for all property types totaled 4,143. That is up 17.2 percent compared to last year and is considered a bellwether of continued positive sales activity next month. Active listings, or the number of available properties, at the end of September was 28,946 and is 10.8 percent below last year.

Houston’s housing inventory, after holding steady at a 3.0-months supply in July and August, shrank in September to a 2.9-months supply versus 3.2 months a year earlier. That compares to a 5.5-months supply of inventory across the U.S. recently reported by the National Association of REALTORS®.

Single-Family Homes Update

September single-family home sales totaled 6,490, up 7.0 percent from September 2013.

Not a good start this morning in the bond and MBS markets ahead of tomorrow’s employment data. Prior to 8:3 the 10 traded unchanged and the open in MBS trading started with the price for 30 yr Fannie’s up 8 bps. Weekly claims and Q3 data at 8:30 turned the rate markets to unchanged. Weekly claims at 8:30 declined 10K from last week to the lowest we have seen in a very long time, at 278K; the expectations were for 283K. The four-week moving average, a less-volatile measure of job cuts, reached the lowest level in more than 14 years; to 279,000, the lowest since April 2000, from 281,250

Yesterday’s elections will remain a hot topic for the rest of the Congressional session but after the initial assessments yesterday today quiet. The President held his ‘mandatory press conference’ after the results talked the talk as did Mitch McConnell the new Senate majority leader; will they walk the walk?

All of our technical indicators, chart patterns and models are now bearish. There is a very significant channel that has developed over the past couple of weeks. Trading channels are significant for us; especially this one that so is holding very well from highs to lows. Today expect little change ahead of employment tomorrow morning. 

Stay tuned and stay focused!

Trick or Treat?

HOUSTON BY NUMBERS

18,031 Single Family homes for sale

9,329 Single Family homes pending sale

5,238 Single Family homes SOLD this month

Ever wonder what area a zip code covers? Here ya go!

TRICK or TREAT! The trick; how to drive global stock markets higher. The treat; the Bank of Japan treated markets with an unexpected increase in monetary stimulus overnight. The reaction; sent stock bourses substantially higher in early trading this morning. At 9:00 the US markets trading in the futures markets were pointing to an all-time intraday high for the DJIA and the other indexes on fire. The bond and mortgage markets taking a hit so far with stock markets roaring.

It is interesting to listen to the CNBC commentators this morning; one would think Helicopter Ben was dropping $1000.00 bills across the country. The Bank of Japan set the world on its heels with the stimulus announcement. It wasn’t expected, and the massive amount is shocking; between what the bank is saying it will do and the GPIF saying it would buy anything around the world equity markets are on fire, The bond market still OK given the circumstances. Maybe the bond market isn’t quite as excited yet about the news from Japan as equity traders are now.

The bond and mortgage markets a little weaker but given the news from Japan and the reaction to it in the equity markets, treasuries are not suffering too much so far. Technically the 10 yesterday tested and held its 40 day average, so far today it tested it again and has held. Stocks rallying because Japan’s pension funds are going to buy global investments, and where better than in the US. Volatility remains high for equity markets but at the moment the bond market is rather stable given the backdrops. All that said, we are not as bullish as we had been; if the 10 closes above 2.35% we will have to accept the bullish bias turning more bearish. 

Houston Real Estate Named #1

Houston named No. 1 real estate market to watch in 2015

 Houston's real estate market has caught the eye of investors worldwide, prompting one to call the Bayou City the "perfect storm for commercial real estate," according to a new report from the Urban Land Institute andPwC.

Enlarge Photo

Houston ranked No. 1 in both investment and development prospects, and it came in second to Austin for home building prospects.

A doctor in NY has been confirmed with Ebola after returning from treating patients in Africa. Three weeks ago that news would have sent markets lower and a run into treasuries, today not so much. 

Since Nov 2008 the Fed’s balance sheet has expanded to $4.48 trillion, an amount that is almost impossible to understand or imagine.Chair Janet Yellen opened the door to keeping a multi-trillion-dollar portfolio for years, saying a decision on when to stop reinvesting maturing bonds depends on financial conditions and the economic outlook. Shrinking the balance sheet to normal historical levels “could take to the end of the decade,” Yellen said at her press conference last month.

Sept new home sales were expected to have dropped 10.3% from August to 460K units (annualized); as reported sales were up 0.2% but only because August numbers were revised substantially lower; originally reported +18% August revised to 10.5%. October builder confidence dropped 4 points a week ago; trying to make a silk purse from a pig's ear will be the task today for the housing market bulls. Still just muddling along; builders are focusing on higher prices homes while turning less interested in entry level houses. Young people are not much interested kin home ownership as in previous recoveries from recessions. No inflation in prices and changing culture are drags on the outlook.