Mortgage Rates Continue Falling

Mortage rates continued to fall this past week. According to BestCashCow:

"Mortgage rates have decended over the past three weeks, touching lows not seen since last April when the Fed began buying up mortgage backed debt. According to the BestCashCow rate tables, the average 30-year fixed rate mortgage is now below 5% at 4.901%. The fifteen-year fixed rate mortgage average is 4.373%, close to the all-time low.
What one hand giveth, the other taketh. And so it is that savers are subsidizing borrowers. I could provide a scathing commentary on this but will simply say that if you can't beat them, join them. If you are looking to buy or refinance, now is another great opportunity to do so.

Housing prices if anything are heading down. The near bankruptcy of the FHA and the glut of foreclosures is continuing to put massive pressure on housing prices. Now is a good time to buy.

Foreclosure Filings Surpass 300,000 for Eigth Month

Think the real-estate market is on the rebound. The foreclosure numbers sure don't paint a recovery picture. Today, RealtyTrac released numbers which show that foreclosures were above 300,000 for the eigth month in a row.

A Bloomberg article says:

A total of 332,292 properties received a default or auction notice or were seized by banks in October, up 19 percent from a year earlier, Irvine, California-based RealtyTrac said today. One in every 385 households received a filing. The tally fell 3 percent from September, the third consecutive monthly decline.

In addition, foreclosures and government stimulated home purchases account for as much as 50% of home sales. The good news is that this may be the market clearing we need before prices can start to firm and even move up a bit. Still, home owners shouldn't expect the 20-30% price appreciations we saw earlier in the decade.

Housing Market on the Upswing

After falling back to 2003 levels, it looks like the housing market is on the upswing, led by low mortgage rates and the first time homebuyer credit. Data from the S&P Case Shiller index show that the level of decline has leveled off and prices have even increased in some cities.

The chart above depicts the annual returns of the 10-City and 20-City Composite Home Price Indices, declining 10.6% and 11.3%, respectively, in August compared to the same month last year. Nineteen of the 20 metro areas and both Composites showed an improvement in the annual rates of decline with August’s readings compared to July. Cleveland was the only exception.

So, if you're thinking of buying a home, now may be a good time.

I just noticed today that one of my favorite sites for financial info and bank rates just launched a section with mortgage rates, home equity rates, and auto loan rates. The site is BestCashCow and IMHO it provides the easiest best way to track cds, savings accounts, etc.

If you're looking to buy or refinance a home, you might want to check it out.
- Cindy

Posting on Booksie.com

I wanted to digress from real estate for a minute to let you know I am posting on Booksie.com. I've always written poetry and I love the site. It's full of other poets, novelists, short story writers, etc. Stop by my page when you get a chance and send me a hello.

Visit my poetry on Booksie.com.

Housing Data Contradicts Media Reports of Subprime Crisis

I just read a very interesting article by Sam Cass on BestCashCow. He compares a chart of where subprime mortgages are concentrated (Northeast and California) with data from the National Association of Realtors. The data, which I published several days ago, shows that both of those markets have relatively healthy housing markets, with prices having gone up over the last year.

The conclusion to draw isn't a hard one. How can there be a sub-prime crisis when the markets with the largest number of sub-prime loans are healthy?

I live in Massachusetts and I can tell you that as I reported earlier, prices here have not come down significantly. The local economy is strong and sellers are taking their homes off the market rather than sell them at lower prices.

My interpretation of the data is that housing prices are declining in places with oversupply and that are overbuilt - South, Midwest, Southwest. But these areas are less expensive and didn't require as much use of subprime and exotic mortgages. So the places where prices are falling are the places where there aren't a whole lot of sub-primes. At least that's what the data says.

NAR Reports Existing Home Sales Stable in July

The National Association of Realtors reported that existing home sales were stable in July with "increases in the West and Northeast offset by a decline in the Midwest, according to the National Association of Realtors®."

Total existing home sales dropped by .2% to a seasonally adjusted rate of 5.75 million. This is 9% below the 6.32 million-unit level in July 2006.

The median prices dropped by .6% to $228,900 from $230,200, the highest monthly price on record. Thus, despite all of the talk of the sky falling, prices have fallen less than 1%.

Invenstories are rising though:

"Total housing inventory rose 5.1 percent at the end of June to 4.59 million existing homes available for sale, which represents a 9.6-month supply at the current sales pace, up from an upwardly revised 9.1-month supply in June."

Overall, this paints a picture of a mixed real-estate market with the high-prices Northeast and West Coast doing better than the South and Midwest. It appears that the areas where prices dropped first are also the first to start to experience a bounce. I project that prices will continue to firm over the next couple of months despite the mortgage problems of the last few weeks. If anything, many markets may soon present a buying opportunity.