Home Equity is Improving NATIONALLY

Where are You Sitting??

         Has your equity position in your home improved???

For the most part, in many parts of the country, the huge losses in home equity have been erased in the past three years as the housing environment improved.   

Buyers have been out, investors and home owners.  In Hampton Roads and other markets, the lower price ranges now are having multiple bids on some homes.   For this market, homes even up to $400,000 are selling quickly.

It appears that this trend of "normal market" will expand to the $500,000 price range in 2015.  

What does this have to do with home equity??

As demand outstrips supply, values of widgets or homes goes UP!!!

Thus, with buyer confidence and improving financial markets have encouraged town home and apartment dwellers to purchase a first or second home, we have the sellers of those homes pushed to purchase a new place.  And so it repeats through the various price strata.

Thus, this new analysis of home equity is not surpising.  Only about 10% of home owners are now under water with their mortgage.

Imagine it!  Perhaps you are not where you once were!

It could be very likely it is time to make that move you been holding off on, fearing your equity situation.

Home Equity

Housing Trends from the "Experts"

Experts' View of

Housings Future

In recent posts, housing trends have been a common topic.   Both Housing Activity and Interest Rates are frequently discussed. 

With the "flat" housing market, so many people are on the fence about moving.  By "flat", home sales in number are approximately the same as in 2013.  

Though home values have increased 4-5% in Hampton Roads(around 3% in Virginia and 7% Nationally), the word "flat" has been burned in buyers minds, or it would seem.

Rather, I believe buyers have for the past three years waited during the 1st half of the year to see how the housing market performed.

Watching to see if:

            Home Sales increased

            Mortgage Rates increased or decreased

            Home Values staid firm

As in the past two years, 2014 is shaping up the same way.  The Fall Season will be much stronger than normal.  As in the past two years, this year again the buyers find home sales are steady, rates are still low and home values continue to rise.  

Thus, the buyers react, contact me and are anxious to buy a home or contact their Realtor to write on my listings.  Five homes under contract in the past two weeks!!!

So as you read the experts(courtesy of Albert Clarks' HomeAction Newsletter), you will note the stats and words like "pent up demand".  In reality, they are summarizing that values are increasing, rates are low and the demand for housing is very real and present.

The notes on 2015 will not be a break out year are contingent on those individual that have a need to move having the confidence in jobs and the future of the housing market to make a move.

If all buyers realized how crucial it was to take advantage of the current market trends, these experts will have a different perspective in 2015.

Experts Predict Where US Home Prices Are Headed

Home prices have risen in most U.S. markets this year, with most states reaching price levels not seen since the real estate boom year of 2006. How long will they continue to rise? Check out these predictions from four top housing economists:

National Association of Realtors Chief Economist Lawrence Yun

"We are in a multiyear housing recovery. For the next five years, we think four of those next five years will be an improving year in terms of home sales given the size of the pent-up demand, provided mortgage rates rise in a modest way."

NAR’s price prediction: Home prices will rise 5 to 6 percent in 2014 and 4 and 5 percent in 2015.

CoreLogic CEO Anand Nallathambi

"Most states are reaching price levels not seen since the boom year of 2006. Our data indicates that this trend will continue, with more states hitting new all-time peaks this year and into 2015 as the recovery continues."

CoreLogic’s price prediction: Prices will rise by 5.7 percent from July 2014 to July 2015.

Fannie Mae Chief Economist Doug Duncan

"On the demand side, there appears to be a conservatism among consumers and their willingness to take on big-ticket purchases, such as homes. We currently estimate that 2014 will finish lower in total sales figures than 2013 – and that 2015, while stronger than 2013 and 2014, will not be the breakout year some are expecting."

Fannie Mae’s price prediction: Prices will rise 5.6 percent in 2014 and 4.3 percent in 2015.

Freddie Mac Chief Economist Frank Nothaft

"House price growth was very strong in 2013 but we don’t expect a repeat performance. Instead, we see housing prices moderate over the next couple of years before settling into its long-run average of about a 1 percent real house price growth per quarter."

Freddie Mac’s price prediction: Prices will rise 5.0 percent in 2014 and 4 percent in 2015.

Wondering what your home is worth in today's market? Contact me and we can discuss it.

Perspective on 2013/2014 Housing Market

Here is a great update summarizing a Mortgage Company's view of 2013 and preview for 2014.

It is always refreshing to hear a honest assessment of one's own prediction, especially when they are perfect.  Yet, an accurate prediction of any year's economy has odds close to winning the Powerball Lottery!   So many variable go into the U.S. let alone the World economy that impacts us all.

As Jim properly notes in this update, all markets are local.  Thus, everyone needs to speak with a local Realtor in his/her market to really know how the local market is faring at any given time.

Yet, Jim's summary of the recent mortgage rates rise in context of the economy could be broadly applied:  

To be sure, mortgage rates are on the rise, but this shouldn't be feared as long as the trend in the mitigating factors – income growth and job growth, in particular – continue to trend in the right direction.

As you read the 2014 comments, you can see the trend is expected to continue!!

HAPPY NEW YEAR!!!

Keeping you updated on the market! For the week of  December 30, 2013 MARKET RECAP Perception Finally Becomes Reality After the Federal Reserve announced tapering would commence in 2014, interest rates stood pat. They didn't move meaningfully higher, though they had moved meaningfully higher in anticipation of the announcement. Now it appears rates are moving higher on the announcement itself. We saw rates on most mortgage products move higher this past week. On a national level, Bankrate.com reports the average rate on the 30-year fixed-rate loan increased five basis points to 4.63% to hit a three-month high. Interestingly, the rate on the five-year ARM also moved meaningfully higher, rising 10 basis points to 3.43% on average. Last week we noted that ARM rates should be muted. Fed officials have stated they will continue to support low short-term rates. Despite the Fed's stated support, though, it appears market participants are questioning the Fed's ability to actually maintain these rates. That said, rates on short-term Treasury securities continue to hold lows established earlier this year, which suggests that we could see a pullback in ARM rates this coming week. As for the 30-year fixed-rate mortgage, we don't anticipate a pullback. When we're not following mortgage-backed security yields, we're following the yield on the 10-year Treasury note, which is a good proxy for where the 30-year fixed-rate mortgage is headed. As the 10-year note goes, so goes the 30-year fixed-rate mortgage. Because so many homes are financed, rising rates obviously impact affordability. Freddie Mac recently delved into the relationship. As to be expected, rising rates are hurting affordability. But it's not a universal phenomenon. Real estate markets, as we all know, are local markets. National numbers are frequently irrelevant to any particular market. That said, Freddie is finding more local markets are becoming unaffordable, though most of these markets are concentrated on the East Coast. Freddie Mac is quick to note (as are we) that rising rates are offset by rising income. Fortunately, incomes are taking flight in many sectors of the economy. As long as incomes continue to rise, and as long as job growth continues to gain momentum, the impact of rising rates on the real estate market will be muted. Low household debt is another mitigating factor to rising rates. After the 2008-2009 recession, many households reduced their debt. Average household debt is currently at a multi-year low. This means many households are in a position to support more debt and a higher monthly payment for big-ticket items like a house. To be sure, mortgage rates are on the rise, but this shouldn't be feared as long as the trend in the mitigating factors – income growth and job growth, in particular – continue to trend in the right direction. Economic Indicator Release Date and Time Consensus Estimate Analysis Pending Home Sales (November) Mon., Dec. 30, 10:00 am, ET 0.5% (Increase) Important. Rate increases and low inventory continue to weigh on sales growth. S&P/Case-Shiller Home Price Index (October) Tues., Dec. 31, 9:00 am, ET 0.6% (Increase) Important. Expect to see some weakening in price growth based on data from other price providers. Mortgage Applications Thurs., Jan. 2, 7:00 am, ET None Important. Rising rates and fee increases will likely restrain overall activity through early 2014. Construction Spending (November) Thurs., Jan. 2, 10:00 am, ET 0.9% (Increase) Moderately Important. Residential spending continues to power overall spending gains. The Year that Was, The Year that Will Be This time last year we forecast that the rate on the 30-year fixed-rate loan would be at or above 5%. We also forecast a significant increase in economic growth. The market didn't quite conform to our expectations: The rate on the 30-year loan didn't hit 5% and economic growth was anemic, at least through the first nine months of 2013. Perhaps we were 12 months ahead of the curve. We say that because we see 5% on the 30-year loan for 2014. We also see stronger growth, which is already materializing, in both the overall economy and the labor market. We also forecast that 2013 would be a good year for housing. We were right. What's more, we reiterate that forecast for 2014. We see more activity, particularly in the new-home market. The trend in sales through the second half of 2013 has been strong. We expect that trend to continue deep into 2014 based on home-builder optimism. As for existing-home sales, we expect they will stagnate through the first quarter of 2014. The dearth of inventory continues to plaque the sector. The good news here is that inventory appears to have bottomed and should improve as 2014 progresses. As for prices, we still believe the pace of appreciation will slow. We've mentioned many times this year that double-digit price gains are simply unsustainable. Low-to-mid single-digit increases are the norm – and are what's sustainable in a healthy market. The bottom line is that 2014 will be another good year for residential real estate, which should give us another reason to celebrate the new year.

Freddie Mac: Slower Housing Market, Steady Rates Till 2014

As noted previously, in this blog and many other outlets, the rates are expected to go up in 2014.

For those of you looking to buy a home or sell a home, please read this latest confirmation that
the house market slow down coupled with Fed bond purchases will keep rates steady...IN THE SHORT RUN.

The slow down is seasonal and should make a marked improvement in Spring 2014.  All the factors:  low rates, pent up buyer demand, short housing stock(oh this has to change!!) will drive buyers into the market.

So read for the latest but remember acting now is the best time to act.  Waiting will only cost you!!!


Freddie Mac: Slower Housing Market, Steady Rates Till 2014

Freddie: Expect a Housing 'Slow Down, Not Shut Down'

Interesting Read!!

It is the first that I have read anywhere about a slow down.  I do expect Hampton Roads to keep
booming.

Perhaps another Government Shutdown in January/February time frame could change everything.  Yet,
I know we all hope that lesson has been learned.


Freddie: Expect a Housing 'Slow Down, Not Shut Down'

Don't WAIT until Mortgage Rates DO go up!

Biggest news in Jim's Mortgage Matters is the expectation is that interest rates won't reach 5% anytime soon on 30 year fixed mortgage money...or as noted " .    It is really unknown when that well occur.

Another takeaway is that housing activity has slowed.  In Hampton Roads, it is not really very true but evidently the higher rates has impacted the trends nationally. 

Yet with a confidence that rates won't move much higher, buyers can feel very good that they still can get some great cheap loans for now.

Now is not the time to wait!!!

Keeping you updated on the market! For the week of  August 5, 2013 MARKET RECAP Are Mortgage Rates the Real Issue? Housing activity has slowed noticeably over the past couple months. Sales of new and existing homes have stagnated, while new residential construction has been volatile. Most market watchers say higher mortgage rates are to blame. To be sure, higher mortgage rates raise the monthly cost of financing and owning a home, but rising home prices are also a contributing factor to overall costs. On the latter, most data sources point to a sustained rise in home prices. The latest data release from S&P/Case-Shiller confirms the trend. Case-Shiller's home price index show that prices rose in 18 of the 20 cities it follows ( Minneapolis and Cleveland were slight laggards). Overall, home prices rose 1% in May compared to April. This latest increase lifts the year-over-year gain to 12.1%. The laws of supply and demand state that when prices rise demand falls. But at the same time, rising prices draw more supply into the market. As we know, lack of supply has restrained sales growth over the past year. The good news is that we have seen supply in existing homes for sale increase over the past few months. Rising home prices are, no doubt, a contributing factor. Going forward we see home-price gains moderating. This should help draw more homes into supply. We say that because more potential sellers will no longer be compelled to wait if they believe the price trend is moderating, or even stagnating. When you become more unsure of the future, you tend to act now; you don't wait. We view moderating price gains as a positive. Indeed, low single-digit annual price gains would be more indicative of a normalized housing market. Double-digit year-over-year price gains aren't the norm, nor are they sustainable. We remain somewhat skeptical, though, that recent mortgage-rate increases and tight supply are the main culprits behind the recent slowdown. Economic growth, or rather the lack of growth, could very well be the real culprit. The fact is that economic growth remains sluggish. In the second-quarter of 2013, gross domestic product (GDP) grew at a 1.7% annualized rate (normal growth is around 3%). Because the economy isn't quite firing on all cylinders, we doubt that we will see any dramatic moves in mortgage rates. Job growth will be key. If we see sustained job growth over the next couple months, this will be indicative of stronger economic growth in the third quarter. If that occurs, rates will move higher, but we still don't think they'll move materially higher. We don't expect to see 5% on the 30-year fixed-rate loan until the Federal Reserve unequivocally indicates it will cut back on quantitative easing, and that remains the great unknown. Economic Indicator Release Date and Time Consensus Estimate Analysis International Trade (June) Tues., Aug. 6 8:30 am, ET $44.2 Billion (Deficit) Moderately Important. The rising deficit points to a modest improvement in domestic demand. Mortgage Applications Wed., Aug. 7, 7:00 am, ET None Important. Sluggish economic growth and higher lending rates have stalled purchase-application growth. Consumer Credit (June) Wed., Aug. 7, 3:00 pm, ET $15 Billion (Increase) Important. Gains are occurring most strongly in student lending, which suggests consumer confidence is lagging. Wholesale Inventories (June) Fri., Aug. 9, 10:00 am, ET 0.5% (Decrease) Moderately Important. Falling inventories point to higher industrial output should economic growth accelerate. Federal Reserve Speak The language from the Federal Reserve can be frustratingly ambiguous. The minutes of the latest Fed governors meeting, released this past Wednesday, state that “economic activity expanded at a modest pace during the first half of the year,” which indicates the economy still isn't growing at a pace the Fed would like to see. At the same time, the Fed has hinted that it could begin tapering quantitative easing within the next month or two. It can all be a bit confusing. The key variable in the equation, and we've said this repeatedly, is job growth. Accelerating job growth means accelerating economic growth, and then, for sure, the Fed will begin to taper and mortgage rates will rise. But if job growth continues to come in at, or below, current expectations, we'll likely see the unemployment rate hold current levels, which is unacceptable to the Fed. Our best guess is that the current mortgage-rate range will hold through summer. If we don't see a material change in the unemployment rate by the end of the third quarter, we'd expect the Fed's commitment to quantitative easing to push into 2014, which means mortgage rates would hold the current range through 2013. If you do not wish to receive this valuable email, please let me know. EQUAL HOUSING LENDER

Rates Higher but Buyers still knocking on doors!!!!!

No surprises here!

Interest rates are higher than they have been for some time but the buyer activity continues to rise.   Locally, it is only the lack of inventory that may derail the improving market.   If the buyers keep taking advantage of the "still good" rates in anticipation of "less good" rates,  more home owners will need to be prepared to move as the inventory is needed.

Get all the detail on present mortgage market by reading below Jim Belote's newsletter

	Keeping you updated on the market! For the week of  July 15, 2013 MARKET RECAP Mortgage Rates Hit Two-Year High We know more than a few people who are smacking themselves on the forehead these days, frustrated they didn't take advantage of the mortgage rates that prevailed two months and 75-basis points ago. Frustration stems from holding out for another 25-basis point drop. You may know it by the popular idiom “penny wise, pound foolish:” Hope to save 25-basis points, but loose 75-basis points in the process. Of course, no one knows with certainty where mortgage rates are heading, but whenever a market has been in a sustained trend, and mortgage rates were in a sustained downward trend for years, the probability grows that each successive day will bring a reversal of that trend. (Economists refer to this phenomenon as Minsky's “Financial Instability Hypothesis.”) To be sure, mortgage lending rates are higher, but not unreasonably so. Today's rates still remain attractive from a historical perspective. The good news is that there have been a few positives associated with rising rates. Though they have slowed refinance activity considerably, they have prompted more homebuyers into action, for fear rates could go higher still. We're not surprised; we've noted many times in the past that anticipation rules people's actions. With all the focus on mortgage rates over the past few weeks, it's worth noting that the housing market nationally is as healthy as it has been in years. CoreLogic's latest data on distressed properties reveal just how healthier the market has become. The inventory of properties in a state of foreclosure fell 29% year over year in May, which means fewer than 2.3 million mortgages – or 5.6% of home loans – remain seriously delinquent. This is the lowest level since December 2008. At the same time, Lender Processing Services data show the number of borrowers who remain underwater fell 47% from the first quarter of 2012 to the first quarter of 2013, which means the percentage of underwater borrowers has dropped to 14.7% of all active loans. This, too, is a multi-year low. Rising home prices and rising consumer demand for homes will continue to reduce distressed inventory and lift more homeowners into positive equity. When stronger job growth is factored in, we're looking at a very healthy outlook for both existing- and new-home sales over the next 12 months. With that said, many pundits remain focused on rising mortgage rates, but we believe unduly so. As long as the economy continues to improve and create jobs, the housing market will continue to improve regardless if rates rise. We were in the minority a year ago when we said mortgage rates were no longer the key variable in the recovery. It appears we were right on that account. Economic Indicator Release Date and Time Consensus Estimate Analysis Consumer Price Index (June) Tues., July 16, 8:30 am, ET All Goods: 0.3% (Increase) Core: 0.2% (Increase) Important. The CPI remains below the Federal Reserve's trigger rate of 2.5% and should not impact interest rates. Homebuilders' Index (July) Tues., July 16, 10:00 am, ET 53 Index Important. Homebuilder sentiment points to stronger starts and higher new-home sales through 2013. Mortgage Applications Wed., July 17, 7:00 am, ET None Important. Rising rates continue to slow refinances, but the four-week purchase trend remains stable. Housing Starts (June) Wed., July 17, 8:30 am, ET 954,000 Units (Annualized) Important. Housing is once again becoming an important driver of economic growth. Job Growth and Interest Rates Last week, we mentioned that Federal Reserve monetary policy is, in essence, closely tethered to job growth: The Fed won't reign in loose monetary policy and low interest rates until the unemployment rate is around 6.5%. The problem, as we noted, is that the unemployment rate is a moving target. Yes, unexpectedly strong job growth can occur, as what occurred in June, with payroll growth hitting 195,000 for the month, roughly 25,000 higher than most estimates. At the same time, unemployment held steady at 7.6% because more people have entered (or re-entered) the job market. So it would appear the Fed would be firmly committed to holding interest rates low for the foreseeable future until 6.5% unemployment is achieved. It's becoming more likely that's not the case. The minutes from the latest meeting of Federal Reserve policymakers show that half want to wind down quantitative easing (money printing, low interest rates) by the end of the year. Given the unimpeded rise in interest rates over the past two months, it's become obvious many credit-market participants are expecting the Fed to wind down sooner than later. The point we need to emphasize is that waiting for 3.5% 30-year fixed-rate mortgages will likely mean waiting for quite a while. At this point, 5% is the more likely future rate, which makes today's rates, in the mid-4% range, look attractive in comparison. If you do not wish to receive this valuable email, please let me know. EQUAL HOUSING LENDER This Newsletter is for informational purposes only. The information contained herein may not be applicable to every situation or jurisdiction and we urge you to consult your professional advisor prior to acting on information contained herein. The content, accuracy and opinions expressed herein are not verified or endorsed by the sponsor hereof.

Foreclosures Down; Home sales UP

Great Summary of recent National Association Realtors data on the housing market.   You will want to read and be inspired.   Yes, it is time to buy and sell real estate again!!

Al Clark's Newsletter shared:

ALL REAL ESTATE IS LOCAL BUT THE NATIONAL SCENE IS IMPORTANT TOO!

CoreLogic Report Shows Home Prices Rise by 12.2 Percent Year Over Year in May Analysis Indicates Projected Growth of 13.2 Percent Year Over Year in June CoreLogic, a leading residential property information, analytics and services provider released its May CoreLogic Home Price Index (HPI?) report. Home prices nationwide, including distressed sales, increased 12.2 percent on a year-over-year basis in May 2013 compared to May 2012. Existing-Home Sales Rise in May with Strong Price Increases According  to the National Association of Realtors?: Total existing Home Sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, rose 4.2 percent to a seasonally adjusted annual rate of 5.18 million in May from 4.97 million in April, Total housing inventory at the end of May rose 3.3 percent to 2.22 million existing homes available for sale, which represents a 5.1-month supply at the current sales pace The national median existing-home price for all housing types was $208,000 in May, up 15.4 percent from May 2012.  This marks six straight months of double-digit increases and is the strongest price gain since October 2005 Eleven percent of May sales were foreclosures, and 7 percent were short sales.  Foreclosures sold for an average discount of 15 percent below market value in May, while short sales were discounted 12 percent. The median time on market for all homes was 41 days in May, down from 46 days in April, and is 43 percent faster than the 72 days on market in May 2012.  Short sales were on the market for a median of 79 days, while foreclosures typically sold in 43 days and non-distressed homes took 39 days. Forty-five percent of all homes sold in May were on the market for less than a month First-time buyers accounted for 28 percent of purchases in May, compared with 29 percent in April and 34 percent in May 2012. All-cash sales were at 33 percent of transactions in May, up from 32 percent in April and 28 percent in May 2012.  Individual investors, who account for many cash sales, purchased 18 percent of homes in May.

Will Higher Rates Hurt Market? Fannie Mae says NO

Sunny housing outlook image via Shutterstock

Does that make any sense??

      Higher Interest rates won't hurt housing 

                                             market??

You begin to read the Fannie Mae article and might wonder who had a drink too many before writing.  

Yet, Fannie Mae is correct.  The slightly higher interest rates won't hurt the recovery because:

  

    1.  Buyers realize that can't wait for "rates to

            go down"

    2.  Decrease in distressed homes raises 

             values and move buyers to buy before 

             values rise more.

    3.  Housing shortage causes fewer 

             selections for a buyer as homes

             sell faster than they come on the 

             market.

    4.   Home sellers waiting to sell will see

              items 1-3 reported in the news

              or in a blog(like this)

And the market will keep improving.

Read for your self below!         

Fannie Mae Says Higher Rates No Problem

Sales Up and INVENTORY DOWN....Prices Rising

Hot off the presses!!

Hampton Roads Real Estate is on fire!!

Sales up up 27.18% over May 2012....biggest year over year increase since January.   With May, that means big sales!!

Inventories of Homes Available are down almost 6% since May last year.  In areas like Chesapeake, it was almost 10%

Read to get the whole scoop on the improving Real Estate Market!!!  

Time to act is now!

Home Values Improving!!

HOME VALUES GOING UP - CHOICE IS GOING DOWN

Al Clark provides this update on Home Values and what is it it for  YOU!! Read and believe!!!!! Topic Summary: Recent statistics indicate that Home Values are up about 10% year over year and up 1.9% just in the February to March time-frame. (Stats Here) Houses on the market are and commanding multiple offers, many times for more than the asking price. Real Estate Professionals are having problems keeping up with demand, due to less inventory to show buyers. Homes are also selling fast. The median time on market for all homes was 46 days in April, down from 62 days in March and 83 days a year ago. As one example of overall log term price appreciation, homes in the Washington, D.C. area appreciated 300% in the last 20 years.  So What's In This For Me?  As homeowners, we probably have a feel for what our homes may fetch on the open market but do we really know? Even if we are not thinking about selling our homes, are we aware of the equity we have built? What's the impact on a retirement strategy? What about college tuition? Sure, many parts of the country have homes "underwater", (owning more on the mortgage than the home is worth) but those numbers have been improving too. Maybe It's Time To Ask! Online services are available to provide you home values but greatly vary in their results, providing you a "range" of possible values. No computer has the experience and the "feet on the ground" knowledge that your real estate professional does. See that "Email" Link over on the left side? Use it to send a request to your HomeActions provider and just ask them to do a CMA. (Comparative Market Analysis) CMA is the term real estate agents use when they conduct an in-depth analysis of a home's worth in today's market. Then once all the facts are uncovered, a credible market based value can be given to you.

Housing Trends eNewsletter- Bryan Cerny

Check it out!!   May Housing Trends Newsletter.

Lots of great detail on present market along with housing related articles for your enjoyment.

You can dig in and compare your market to other markets as how the real estate market is doing.

Or you can skim for the articles that interest you most!

It is all about you!!   Let me know how I can help you!



Housing Trends eNewsletter- Bryan Cerny

Mortage Matters: Housing Market Shaping Up

 

Sometimes, it is best to allow people to speak and to share great insights.  I find this so true with Jim Belote's Mortgage Matters.

As always with great input on mortgage rates and changes on the housing market which support what I have blogged recently...imagine that.

Yet, the summary statement in this article sums it up quite well:

In short, the housing market is shaping up nicely as we head into the summer selling season. We expect sales to improve materially as the summer progresses.

Nice, huh???

Believe it!!  Now is the time to act whether buying or selling!
What are your plans in 2013??

Keeping you updated on the market! For the week of  May 27, 2013 MARKET RECAP   Three-Peat   Three weeks and three-consecutive mortgage-rate increases. That's the lead story on the financing-front of housing. The rate on the 30-year fixed-rate loan is up over 20 basis points nationally based on Bankrate.com's survey of mortgage lenders. In fact, rates are up to levels last seen in late-March and early-April. There are a couple of variables at work in the mortgage market. For one, the economy and job growth have shown signs of picking up pace over the past month. More economic growth and more job growth means more loan demand, which pressures interest rates to rise. More recently, speculation over the Federal Reserve and quantitative easing have pushed rates higher. Specifically, investors and speculators believe it's more likely that the latest round of quantitative easing could end sooner than later. The Fed itself has suggested as much: Chairman Ben Bernanke, speaking to Congress this week, didn't rule out the possibility of tapering the latest round of quantitative easing (QE3) by Labor Day if the labor market continues to improve. Quantitative easing is simply the Federal Reserve injecting money into the banking system by purchasing U.S. Treasury notes and bonds and mortgage-backed securities. The Fed purchases these instruments by creating new money, which it credits to banks' Fed account when the banks sell the instruments to the Fed. Lately, the Fed has been purchasing theses instruments at the rate of $85 billion per month. The purchases create demand, which, in turn, reduces yield to produce the record-low mortgage rates we've experienced in the past year. To be sure, Labor Day isn't set in stone, and the Fed is still concerned the labor market could backslide, but it's becoming more apparent quantitative easing won't go on indefinitely. This means a floor has been placed under mortgage rates, so it's become more likely that rates have gone as low as they will go (sans an unseen economic catastrophe). If housing continues to pick up pace, the Fed will have even more reason to back away from quantitative easing. Housing appears to be picking up pace. Sales of existing homes increased 0.6% to an annual rate of 4.97 millions units for April. Sales of single-family homes were particularly robust, increasing 1.2% for the month. Existing-home prices also improved strongly. The median price of an existing home increased 4.8% to $192,800 in April – the highest price of the recovery. We've frequently mentioned that rising prices spur more supply to come to market. That's exactly what's happening. An additional 230,000 units came to market in April. This lifted the supply of existing homes to 5.2 months from 4.7 months at the current sales rate. On the new-home front, sales growth was even more dramatic, with sales rising 2.3% to 454,000 units on an annualized basis in April. Meanwhile, prices soared, increasing 8.3% to a record median price of $271,600. That said, new homes aren't pouring into the market like with existing homes: New homes for sale rose only 5,000 for the month, which means inventory remains low at 4.1 months. In short, the housing market is shaping up nicely as we head into the summer selling season. We expect sales to improve materially as the summer progresses.   Economic  Indicator Release  Date and Time Consensus  Estimate Analysis Consumer Confidence (May) Tues., May 28, 10:00 am, ET 70 Index Moderately Important. Job growth is pushing confidence higher. Mortgage Applications Wed., May 29, 7:00 am, ET None Important. Rising mortgage rates have slowed refinance and purchase activity. Pending Home Sales (April) Thurs., May 30, 10:00 am, ET 106 Index Important. More inventory will lead to more sales. Personal Income (April) Fri., May 31, 8:30 am, ET 0.2%  (Increase) Important. Improving wage and salary growth support a rising home-sales trend.   Don't Fear Higher Interest Rates We've discussed this before, but it's worth discussing again: Rising interest rates won't derail the recovery (both economic and housing). We appear to be in the minority opinion, though; many of our colleagues think otherwise. Our thesis goes like this: Rising rates will be accompanied by economic and job growth, which means more people will be able to afford a home, along with the cost of higher lending rates. At this point, more people working trumps historically low interest rates. Moreover, rising rates accompanied with economic growth will spur people to action: If they believe rates are more likely to rise than fall, they will tend to act now instead of procrastinating. It's also worth noting that we are still in an unnatural lending environment. The Federal Reserve's manipulation of mortgage rates is an anomaly that can't go indefinitely. (The market can take only so much liquidity before serious dislocations occur.) We think the return to normalcy – a lending market based on natural lending rates, economic growth, and job growth – offers many more positives than negatives. We've had higher mortgage lending rates in the past and have prospered. If higher rates are accompanied with a strong economy, we see no reason why we wouldn't prosper again.