Weekly Equity Assets Realty Insights

Posted by: Equity Assets Realty
August 20th, 2015
 

Equity Assets Realty offers commercial & residential real estate service in the South Texas Counties of Hidalgo and Cameron County which include McAllen, Mission, Edinburg and the surrounding areas of the Rio Grande Valley. Our weekly blog posts give real estate buyers and sellers useful insights which help them in buying and selling real estates in Texas as well as itz surrounding areas.

Here are two real estate blog posts and updates that might help you to choose right homes for sale as well as appropriate real estate agent and take right decisions.

 

HOUSING SUPPLY FALLS FURTHER, FEEDING PRICES

Ask anyone trying to buy a home today, and the vast majority will launch into a story about a bidding war. Demand for housing has returned, but housing supply has not, and the numbers are only getting worse.

The supply of homes for sale nationally in June fell 6.5 percent from a year ago, according to a new report from Zillow, a real estate listing and analytics company.

“Finding a house is the last hurdle for many buyers who have saved a down payment and gotten pre-approved for a mortgage, but low inventory levels like those we’re seeing across the country can bring the homebuying process to a screeching halt,” said Stan Humphries, chief economist at Zillow. “In many markets, there just isn’t a lot to choose from in terms of homes on the market.”

The bigger the city, the bigger the problem. Inventory fell in 19 of the nation’s largest metropolitan areas. Supplies are also falling the most in the lower price ranges, making it even more difficult for already cash-strapped first-time buyers to get into home ownership.

The reasons for tight supply are manifold: Homebuilders are putting up single family homes at a far slower pace than historical norms. They cite a shortage of labor for at least some of that weakness, but they also are not seeing strong demand, due to their higher prices.

Another reason is negative equity. Millions of homeowners still owe more on their mortgages than their homes are worth, or they don’t have enough equity in their homes to afford to move up, leaving them unable to list their homes for sale. Still other potential move-up buyers are afraid they won’t be able to find a home to buy, so they stay where they are.

Supply is also directly connected to price. Supplies are lowest in markets where prices continue to rise, but supply is actually starting to ease in markets where home prices have flattened. Take Washington, D.C., for example. Home prices are flat from a year ago, and inventory is now up nearly 19 percent, according to Zillow. In Dallas, however, where prices are still rising, up 12.5 percent from a year ago, inventory is down nearly 20 percent.

“Sellers tend to want to hang in and get the last juice out of the orange,” said Humphries. “If you think you might see 10 percent appreciation over the next year, is it rational to move where you might squeeze more out of the market? No.”

That seller psychology is only feeding the problem in some of the hottest markets. Low inventory only pushes prices higher, and makes more sellers want to wait. That in turn pushes supply lower, as housing demand rises. In addition, higher rents are keeping more first-time buyers from saving for a down payment.

“If we can get additional increase in supply, then price increases will begin to flatten out, which will be good for the economy, good for many first time buyers, but as long as we have limited supply, and that’s what we have today, then prices inevitably will continue to rise,” said Lawrence Yun, chief economist for the National Association of Realtors.

 

WEEKLY MORTGAGE APPLICATIONS ROSE 4.7%, SPURRED BY REFINANCING

Mortgage volume finally made a move, jackhammered out of three stagnant weeks by a drop in interest rates.

Total applications increased 4.7 percent on a seasonally adjusted basis for the week ending July 31, versus the previous week, according to the Mortgage Bankers Association (MBA).

Rate-sensitive refinances led the charge, jumping 6 percent for the week. Refinance volume, however, is just 8 percent higher than one year ago. Mortgage applications to purchase a home rose 3 percent for the week but are now 23 percent higher than the same week one year ago.

“Despite recent concerns about the economy, both purchase and refinance applications increased strongly in response to lower interest rates last week. Refinance activity was the highest since May when rates were last at this level,” noted Lynn Fisher, MBA’s vice president of research and economics. “The increase in purchase activity was also notable for this time of year.”

Mortgage volume finally made a move, jackhammered out of three stagnant weeks by a drop in interest rates.

Total applications increased 4.7 percent on a seasonally adjusted basis for the week ending July 31, versus the previous week, according to the Mortgage Bankers Association (MBA).

Rate-sensitive refinances led the charge, jumping 6 percent for the week. Refinance volume, however, is just 8 percent higher than one year ago. Mortgage applications to purchase a home rose 3 percent for the week but are now 23 percent higher than the same week one year ago.

“Despite recent concerns about the economy, both purchase and refinance applications increased strongly in response to lower interest rates last week. Refinance activity was the highest since May when rates were last at this level,” noted Lynn Fisher, MBA’s vice president of research and economics. “The increase in purchase activity was also notable for this time of year.”

The average loan size, which had been trending down, edged back up slightly. Lower rates give buyers more purchasing power.

The gains may be short-lived, as mortgage rates moved higher Tuesday. Friday’s employment report, however, will be a major factor in deciding rates over the next few weeks. Rates still take a back seat to mortgage credit availability, which the housing industry claims are still too tight and continue to hold back a more robust housing recovery.

Banks did report having eased lending standards slightly for a number of categories of residential mortgage loans over the past three months, according to the Federal Reserve’s July 2015 Senior Loan Officer Opinion Survey on Bank Lending Practices, released Monday.

The only exception was in government-insured loans. The easing was more pronounced for jumbo residential mortgages that conform to the Consumer Financial Protection Bureau’s qualified mortgage rules, according to the survey. It also noted stronger demand across most categories of home purchase loans.

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