Can it be? Really?? SPRING!!!!!!

Spring is HERE!!

I may be a bit too optimistic.  Yet after three weeks of snow and cold reminiscent of my childhood in the Midwest, Hampton Roads is ready for the 50's and 60's projected for this week.

Yes, we have nothing to complain about!  Boston, you took the brunt of the abuse but weren't far ahead of the Kentucky, Michigan and host of other states with record snow falls and/or horrific traffic snarls due to the "normal" winter weather.

Rather interesting that the snow and cold that all those kids were told about by parents finally showed up!!

With the break in the weather, the already strong Spring selling season should really heat up.  Even with weather, I have had the strongest Spring in four years!!  

For the past three years, buyers and sellers stayed on the sidelines while interest rates were low and buyer demand(for sellers) was starting to show until the second half of the year.  Thus, the sales time frame was inverted:  Spring slow   Fall fast.

But with rates for the fourth year in a row around and right now below 5%(closer to 4% right now), mortgage credit availability way up and FHA lowering the MIP premiums, buyers are out in force.

Many of the buyers are sellers looking to move up or downsizing to retire.  Thus, 2015 should see exponential activity caused by the $200,000 home seller, buying the $250,000 house so that seller can purchase a $350,000 home and so forth.

The Spring season strength is also seen in new construction.  Builders again believe that their product will move.  And it is all because of what I noted above.  As the lower price homes sell, eventually a home buyer seeks to move to new construction versus resale.  

Also, home owner strickly wanting new construction provide needed inventory to buyers looking for their next house.

Once the cycle begins, it is like any natural cycle in nature: it becomes self sustaining!!   Normal factors of the market keep this self-sustaining cycle in appropriate parameters to continue for years.

Only the enzyme of "frantic" buying caused by too little inventory for too many buyers would cause the cycle to spiral out of control as relates to home prices.  

With the pent up demand caused by 5+ years of buyers "waiting for the market to improve", it is possible in the later phases of this self-sustaining cycle that prices will once again skyrocket.

Though benefiting a few sellers over a short period of time, such skyrocketing values have very negative affect upon a normally healthy real estate market.

All this said, you should know now is the time to buy.  Rates and prices will only go up as this cycle reaches maximum operating potential.  

Call me today at 757 680-6546 to make your dreams come true!

Economist: Here’s What You Should Know about the 2014 Housing Market

This is a much read article shared via The Real Estate Book blog. I love to shared the best information.  The Real Estate Book is a great source of both market information and for the home that you might buy.

You will see that the economic outlook is that 2014 should be the strongest real estate market since the "Great Recession".   You will see there are many factors under girding this evaluation.

So read and decide:  Why am I still sitting on the sidelines???

Economist: Here’s What You Should Know about the 2014 Housing Market

Time to Sell Your Home

Why Now is the Time to Move

Real Estate Market on 15 month Tear

Latest Update in mortgage industry is pretty well summarize in Jim B's newsletter.

Up We Go!!

The pressure continues on interest rates but the housing market continues to improve.  Perhaps the naysayers will end up being on the wrong side of the market!!!  15 consecutive months of price improvements nationwide.  Jim notes: "... price gains have pulled many owners with negative equity into positive territory ".  Isn't that great news??!!

The only negative is that home owners wishing to stay in their homes have cut back on refinancing.  This is understandable as many people that purchased in the past 7 years have had rates under 6% and many under 5% thus refinancing has no real attraction as rates increased to 4% and above.

We keep on humming along!

Keeping you updated on the market! For the week of  July 8, 2013 MARKET RECAP Mortgage Rates Take a Breather   You would think mortgage rates would need a breather after experiencing their biggest jump in 26 years. In little more than a month, rates on most lending products have risen at least a full percentage point. This past week, it was all quiet on the mortgage front. Rates were mostly staid, as concerns over the Federal Reserve “tapering” its purchases of mortgage backed securities (MBS) waned. As we’ve noted frequently in the past, the Fed's demand for these securities keeps yields low, which, in turn, keeps mortgage rates low. We've also reported over the past few weeks how rising rates have taken the steam out of refinances. Steam continues to escape: Refinances dropped another 16% last week and are at their lowest level since July 2011. The refinance percentage of market activity has dropped to 64%, which is the lowest percentage since May 2011. Purchase activity remains relatively robust in comparison, falling 3% for the reported week. But when the longer term is considered, we find purchase activity is up 12% year over year. Despite the spike in mortgage rates, home affordability remains high. The good news is that higher financing costs haven't materially dampened enthusiasm to buy and finance a home. The question is how long will affordability remain high? Prices have moved considerably higher, to be sure. CoreLogic's latest home price index shows home prices nationally posted a 15 th consecutive monthly increase in May. The latest increase pushes the year-over-year increase to 12.2%, the largest annual increase in over seven years. What's more, it appears we can look forward to additional price gains. Clear Capital forecasts the housing market could outperform historical average price gains by 4% to 5% for the remainder of 2013. Prices are obviously an important variable in affordability. Rising prices will make homes less affordable. Indeed, price gains have lowered affordability in many local markets ( San Francisco and New York City come immediately to mind). On the other side of the coin, price gains have pulled many owners with negative equity into positive territory. Rising prices are also helping to alleviate the supply shortage. Home inventory is up 16.7% year to date, and will likely continue to rise with rising home prices. A basic economic law states supply rises and falls with prices; rising prices induce more supply to come to market. That's exactly what we are seeing today. But more supply will eventually slow price growth. That's not a bad thing. Today's double-digit price gains are unsustainable, because they far exceed economic growth. Yes, prices are starting from a deep hole in many markets, but eventually price growth must moderate, lest we find ourselves in another housing bubble. A sustainable price-growth rate is one that matches inflation and economic growth. A rate above that is sustainable for only a limited time, usually no more than two or three years. For now, keep in mind that higher home prices and higher lending rates will eventually impact affordability. We might sound like a broken record on this point, but it's worth repeating: waiting is the risk in this market.   Economic  Indicator Release  Date and Time Consensus  Estimate Analysis Consumer Credit (May) Mon., July 8, 3:00 pm, ET $10 Billion (Increase) Moderately Important. Growth in non-revolving credit is indicative of growing home and auto demand. Mortgage Applications Wed., July 10, 7:00 am, ET None Important. Stabilizing rates should reignite refinance and purchase demand. Federal Reserve FOMC Minutes Wed., July 10, 2:00 pm, ET None Important. Most Fed governors are expected to support continuation of QE3. Producer Price Index (June) Fri., July 12, 8:30 am, ET All Goods: 0.5% (Increase) Core: 0.2% (Increase) Important. Producer-price inflation is showing signs of accelerating, which could pressure interest rates to rise.   Are We There Yet? We refer to the point when the Federal Reserve will withdraw from the MBS market. Job growth is the tipping factor, according to most market watchers. On that front, it appears the Fed will likely remain MBS buyers for a while longer. The Fed has targeted an unemployment rate of 6.5% before it seriously considers tapering QE3. The unemployment rate is a full percentage point above the Fed's target, so we still have a ways to go. Job growth, therefore, is key. If the economy added 150,000 jobs monthly, the unemployment rate could fall to 6.5% in seven months. But there's an extenuating factor: participation rate. If more people enter the employment market, higher job growth will be needed to absorb more participants. If we were to make an educated guess when the Fed will begin to taper its MBS purchases, we would guess that early next spring is the most likely scenario. So we don't expect rates to rise much higher, at least through the summer, but neither do we expect them to move lower either. With that said, the probability of higher rates is higher than the probability of lower rates at this point; thus further buttressing our argument on the dangers of waiting.     If you do not wish to receive this valuable email, please let me know. EQUAL HOUSING LENDER

Ben's Banter Sinks Stocks

Though Jeff Hurd always provide an update on the improving housing market, I thought that you have heard enough from me via this blog this week on that matter.   Perhaps you never get tired of hearing that the Real Estate Market is better every day!

Jeff covers the recent changes in the Stock Market.  As these changes impact all our sense of well being, I thought his perspective would be of interest to you.

Read and enjoy!!  Question me as needed!!!

Jeff Hurd Loan Officer780 Lynnhaven Parkway #420 Virginia Beach, VA 23452 Mobile: 757-329-1115 Fax: 866-396-6422

BEN'S BANTER SINKS STOCKS...  The major stock indexes fell for the week as investors bailed on equities thanks to Fed Chairman Ben Bernanke's comments after the Fed meeting. The written FOMC Statement indicated the Fed would keep buying $85 billion per month worth of mortgage bonds and Treasuries in its quantitative easing program to boost the economy and keep interest rates down. But Bernanke later commented that if positive trends continue, the Fed could reduce bond purchases later this year and stop them completely by mid-2014. Some experts suggested investors overreacted, and it will be a long time before the Fed raises short-term interest rates.

It didn't help that the economic data coming in was positive, indicating things are indeed improving. The Empire State index of manufacturing in the New York region hit a three-month high in June, showing strong expansion after contracting in May. May Existing Home Sales and the NAHB home builders index surprised to the upside, as did the Philadelphia Fed index, which registered solid expansion for manufacturing in that region. But worried Wall Streeters should have noted CPI inflation was just 0.1% for the month and the May unemployment rate of 7.6% is a long way from the Fed's 6.5% target.

The week ended with the Dow down 1.8%, to 14799; the S&P 500 down 2.1%, to 1592; and the Nasdaq down 1.9%, to 3357. 
Fears the Fed might taper its bond buying sooner than expected hammered Treasuries and mortgage bonds. The FNMA 3.5% bond we watch ended the week down 3.04, at $100.12.Yet national average mortgage rates slipped last week, after edging up for over a month, according to Freddie Mac's Primary Mortgage Market Survey. Rates are still up a tad from a year ago, but remain at historically attractive levels. The Mortgage Bankers Association reported purchase loan demand down slightly for the week, but up 12% from a year ago,.

DID YOU KNOW?... Although investors worried the Fed might soon tighten monetary policy, during the past four Fed tightening cycles since the 1980s, the economy was growing an average of 3.68%, versus an average growth rate over the last 12 months of 1.8%.

>> This Week’s Forecast

NEW HOME SALES UP, GDP TEPID, INFLATION AND MANUFACTURING OK... Economic data this week should show mild but steady growth, offset by some minor disappointments. New Home Sales are expected to continue their move upward in May, while Pending Home Sales should indicate existing home sales will increase a few months out. The GDP Third Estimate is predicted to show continued economic growth at a modest rate.

Brighter news should come Thursday when Core PCE Prices are forecast to reveal inflation well under control in May. Personal Spending is expected to indicate the beleaguered consumer is staying in the game. The Chicago PMI reading of manufacturing health in the Midwest should dip a little but remain in expansion territory.

>> The Week’s Economic Indicator Calendar

Weaker than expected economic data tends to send bond prices up and interest rates down, while positive data points to lower bond prices and rising loan rates. 

Economic Calendar for the Week of June 24 – June 28

Date	Time (ET)	Release	For	Consensus	Prior	Impact
Tu Jun 25	08:30	Durable Goods Orders	May	3.0%	3.5%	Moderate
Tu Jun 25	10:00	Consumer Confidence	Jun	74.9	76.2	Moderate
Tu Jun 25	10:00	New Home Sales	May	460K	454K	Moderate
W Jun 26	08:30	GDP – Third Estimate	Q1	2.4%	2.4%	Moderate
W Jun 26	08:30	GDP Deflator – Third Estimate	Q1	1.1%	1.1%	Moderate
W Jun 26	10:30	Crude Inventories	6/22	NA	0.313M	Moderate
Th Jun 27	08:30	Initial Unemployment Claims	6/22	345K	354K	Moderate
Th Jun 27	08:30	Continuing Unemployment Claims	6/15	2.958M	2.951M	Moderate
Th Jun 27	08:30	Personal Income	May	0.2%	0.0%	Moderate
Th Jun 27	08:30	Personal Spending	May	0.4%	0.2%	HIGH
Th Jun 27	08:30	PCE Prices – Core	May	0.1%	0.0%	HIGH
Th Jun 27	10:00	Pending Home Sales	May	1.5%	0.3%	Moderate
F Jun 28	09:45	Chicago PMI	Jun	55.5	58.7	HIGH
F Jun 28	09:55	U. of Michigan Consumer Sentiment – Final	Jun	82.6	82.7	Moderate

>> Federal Reserve Watch   

Forecasting Federal Reserve policy changes in coming months... Even though there is talk of the Fed tapering its bond buying, economists still don't see the Fed raising the super low Funds Rate until the recovery is strong enough to bring unemployment down to 6.5%.Note: In the lower chart, a 1% probability of change is a 99% certainty the rate will stay the same.

Current Fed Funds Rate: 0%–0.25%

After FOMC meeting on:	Consensus
Jul 31	0%–0.25%
Sep 18	0%–0.25%
Oct 30	0%–0.25%

Probability of change from current policy:

After FOMC meeting on:	Consensus
Jul 31	<1 span="">
Sep 18	<1 span="">
Oct 30	<1 span="">

The Tide Continues to Rise: Mortgage Rates

The signs were all there:

    Improving Housing Market

           Overextended Time Frame for Cheap Money

                 Fed's "notes on ending purchase of mortgage backed 
                            securities

                       Stock Market recovery in 2012 and thus far in 2013

Now, Jim Belote's Weekly Update begins with:

    Mortgage Rates Continue Their March to Higher Ground
                (my italics and bolding for emphasis)


As you can see as you read the article below, Jim notes the reality that I noted in the past few blogs on market trend:

We're not surprised to see an uptick in purchase activity; expectations govern behavior. If potential borrowers believe higher rates are in the future, they'll act today to beat the increase. If they are fence sitting, their expectations of lower rates will keep them there, but a change in expectations (exceptions of higher rates, to be specific) will prompt them into action.


Thus, the real estate market and mortgage origination activity will increase now as interest rates rise because buyers want to beat the next increase!!  

As a buyer, you have to understand that you must be more proactive when you see the home you like.   The competition is out there!

As a home owner, if you want to move, now is the time!  With buyers "off the fence", you have ready, willing and able buyers looking to snatch up a home before the rates rise more.

Let me know if you agree!!   

Keeping you updated on the market! For the week of  June 17, 2013 MARKET RECAP Mortgage Rates Continue Their March to Higher Ground Mortgage lending rates were once again the lead story in housing, as well as in many media outlets. In many markets, rates are up 60 basis points or more over the past six weeks. This means potential borrowers and new home buyers are facing financing rates unseen since April 2012. Interestingly, rising rates actually had a stimulative effect on mortgage activity last week, according to Mortgage Bankers Association data. The MBA's latest activity report shows that both refinances and purchases were up 5%. For most of the past month, refinance activity was declining at a double-digit weekly rate, while purchase activity was mostly flat lining. We're not surprised to see an uptick in purchase activity; expectations govern behavior. If potential borrowers believe higher rates are in the future, they'll act today to beat the increase. If they are fence sitting, their expectations of lower rates will keep them there, but a change in expectations (exceptions of higher rates, to be specific) will prompt them into action. We admit to being slightly surprised (and pleasantly so) at the reversal in refinance activity. With mortgage rates holding so low for so long, it's easy to take for granted that everyone who could take advantage of a refinance has. That's obviously not the case. And even though financing rates are higher for refinances, expectations still play a role. The good news is that more homeowners are in a position to refinance. CoreLogic reports that the number of underwater homeowners has dropped below 10 million for the first time in more than three years. That's a significant improvement over the 12.1 million who were underwater at the end of 2011. Of course, these homeowners have been floated by the relentless increase in home prices that's occurred over the past year. CoreLogic's data show prices up nationally 12% year over year in April. Moreover, the numbers from most housing-data providers corroborate CoreLogic's numbers. Despite higher rates, we expect refinance and purchase activity to remain robust. We also expect housing activity to rise: Higher prices will draw more inventory into the market. Above-water homeowners (and even submerged owners who don't have to bring money to the table) are more willing to list their home. As we know, lack of inventory has restrained sales growth over most of 2013. We've frequently stated that today's higher lending rates aren't necessarily to be feared, especially when placed within an historical context: It wasn't all that long ago when a 6% 30-year fixed-rate loan was considered a bargain. Economic Indicator Release Date and Time Consensus Estimate Analysis Home Builders' Index (June) Mon., June 17, 10:00 am, ET 45 Index Important. Sentiment has stagnated on input bottlenecks related to construction. Housing Starts (May) Tues., June 18, 8:30 am, ET 928,000 (Annualized) Important. Permit activity points to more starts heading into summer. Mortgage Applications Wed., June 19, 7:00 am, ET None Important. Purchase activity remains elevated despite rising rates. Federal Reserve FOMC Meeting Announcement Wed., June 19, 2:00 pm, ET None Very Important. Any foreshadowing of a change in Fed policy will move interest rates. Existing Home Sales (May) Thurs., June 20 10:00 am, ET 5 Million (Annualized) Important. Rising inventory should lead to rising sales volume. Gauging the Odds Last week we delved into the Federal Reserve and “tapering.” Specifically, we explained why we thought the Fed was unlikely to materially reduce its purchases of mortgage-backed securities (MBS) this year. Mortgage rates have risen on the precept that the Fed was indeed shifting its policy toward purchasing fewer MBS. Lower Fed demand for MBS, would, in turn, lead to higher yields in order to increase more private-buyer demand. Last week we mentioned that reduced MBS supply may have played a role in reduced Fed purchases. We can add a couple more reasons why think the Fed's appetite for MBS hasn't diminished: For one, employment and wage growth is still anemic. The Fed has hinted that it won't materially alter quantitative easing (buying MBS and U.S. Treasuries) until the unemployment rate drops to 6.5%; it's currently at 7.6%. In addition, manufacturing has weakened in recent months, which suggests economic growth also has room for improvement. We'll have more insight into the Fed's “ tapering ” leanings this coming Wednesday after the board of governors meeting and the subsequent press conference. We expect that the Fed won't announce any material changes to its policies. Therefore, we don't expect mortgage rates to move materially higher. You'll note in the above Bankrate.com graph, rates have been plateauing. With that said, we don't expect rates to move materially lower either, so the risk of waiting remains.