On October 3, 2015, the Consumer Financial Protection Bureau’s “Know Before You Owe” rule went into effect. This new rule mostly affects how your loan process will go. It is a way that the lender and the title company can communicate to let the consumer know, up front, what they will be paying for. Please click here (https://www.youtube.com/watch?v=AwZERLDHJf0&feature=youtu.be) to find out more about the “Know Before You Owe” rule and how it may affect you.
The Flagstaff Elite team strives to be as educated as possible with any and all changes to the buying and selling process. We work hard with lenders and title companies so that we can make the process as smooth as possible. So, please know when you hire and refer us we will be up to speed on all of these changes.
The home sales market we’ve seen in 2013 is the home sales market we’re likely to see in 2014: Improving but not at a knock-your-socks-off pace
Why will the housing sector improve? Because job creation is forecasted to improve a bit (say 200,000 jobs per month instead of the average of 180,000 per month that we’ve seen nationally in 2013). That should be enough to allow many folks who’ve been held back by the recession to enter the housing market as first-time buyers and we’ll see re-entry by some who had to give up their homes during the downtime.
“It’s almost going to be like a tug of war next year. You have what appears to be a recovering economy, but at the same time you have the prospect of higher interest rates,” said Nicolas Retsinas, senior lecturer in real estate at Harvard Business School, as quoted in the attached MarketWatch.com piece. “Generally, when there is a tug of war between jobs and interest rates, jobs win.”
2013 saw price increases with mortgage rates going up only at the end of the year. Rates will continue that modest incline throughout 2014, shutting some people out of the market, but really relatively few compared to those who can buy homes because they have jobs. Buyers discouraged in 2013 by low inventory will have more to choose from in 2014 as new home construction rises and more home owners who have been waiting for price increases decide that now is the time to sell
It’s not necessarily all true that “as the Phoenix market goes, so goes Flagstaff,” but there is enough truth in it to keep our hands on the pulse of the Phoenix market.
The busy real estate season in Phoenix tends to run in the winter, starting with October while, in Flagstaff, the busier season begins in April and winds down in October. The basic economic factors impacting Phoenix often have a softer impact in Flagstaff (our rate of foreclosures and home price drop during the recession stayed lower than Phoenix, for example).
REALTORS® Confidence Survey provides insights into real estate market
The demand for rental units appears to remain strong, judging by rental price trends. Approximately half of REALTORS® responding in the REALTORS® Confidence Index Survey reported higher residential rents compared to 12 months ago. This is certainly true with Flagstaff homes and condos.
There have been reports that Millennials (the generation born approximately 1978/9 and subsequently) may be unable or unwilling to participate in homeownership to the same degree as previous generations–based on tough job markets and higher levels of student debt. This conclusion is not substantiated by a recent survey. Millennials may be forming households at a later ages due to the economy, but there are more of them than the generation ahead, so they push demand higher.
Mortgage rates are hovering in the mid-4% range for conventional, fixed-rate 30-year loans following the Federal Reserve Open Market Committee’s decision yesterday not to begin to reduce its support for the mortgage bond market.
Since 2008, however, short-term rates have been near zero, which means that they can’t go lower. Yet the economy has remained weak, so the Fed has tried to gain traction with other means — mainly by buying longer-term bonds, both U.S. government debt and bonds issued by federally sponsored home-lending agencies. It’s these purchases that have kept mortgage rates so low for so long.
For the last few months, the Fed has been talking about slowing the pace of these purchases, bringing them to a complete halt by sometime next year. The Fed had said that at its September 18th meeting, it would announce whether it would begin tapering its bond purchasing program and, if so, by how much – depending on the Fed’s view of the economy. The mere talk had raised 30-year mortgage rates from below 4% to just under 5%.
The reason the Fed had been giving for ending the taper was an improved economic outlook. But on September 18, Chairmen Ben Bernake said that the Fed still feared a turn for the worse. He noted that Washington politicians are hurtling toward an impasse over government spending. “We have been overoptimistic.” The Fed is “avoiding a tightening until we can be comfortable that the economy is in fact growing the way that we want it to be growing.”
So, for now, interest rates are unlikely to continue rising and are even likely to drop a bit from recent highs. This should encourage buyers to come into the housing market through the winter.
Here’s a sign of how tight inventory levels have been lately: More homes are selling in a flash—finding a buyer within 24 hours of being listed. In some places, homes sell in just one day. Flagstaff is one of those places — for SOME Flagstaff homes.
“It’s the extreme, though there is more of it right now than there has been in years,” said Jed Kolko, chief economist for Trulia, a real-estate website, referring to the flash sale phenomenon across the country. Read Amy Hoak’s article in MarketWatch.com here.
I’ve seen it happen in Flagstaff this spring, but seller beware: Your home may be under contract in a day but there is still all the bargaining about inspections and perhaps about appraisal value. Don’t start spending that cash until the deal is actually done.
On the other hand. seller also beware that normal market rules apply: Your house MUST look clean and uncluttered. Odd floor plans and bare dirt landscaping are not going to cut it. Over-pricing will lead to few showings instead of buyers making low-ball offers (that over-pricing to get an offer is so 1990s). Buyers EXPECT nice houses to sell quickly at the price they see listed on the internet. If they see that yours hasn’t, they perhaps will accept the judgment of others who have passed you by. Bottom line: Make your house ready to sell in both appearance and price before you put it on the market.
As welcome as a long-awaited improvement in the American housing market may be, the unusually low level of homes for sale is creating problems for buyers and sellers alike
Flagstaff home buyers are coming out to buy in larger numbers than in recent years, but they are “disappointed in what they see for their money,” as one of my colleagues said to me last week. To some extent, that’s an old story in Flagstaff, where home prices drive our cost-of-living index above the national average. Still, coming out of a depressed housing market, buyers are expecting more for their money. Flagstaff sellers, meanwhile, seem to be holding out – our inventory remains very low. New home builders are gearing up to fill the gap, but those homes are four-12 months away from occupancy dates.
It’s against this local Flagstaff real estate market backdrop that I found this article from last week’s New York Times business section interesting. My advice is not to get carried away with some of the “hype” in the article’s quotations. Yes, we see multiple offers on Flagstaff properties. Yes, we see the beginning of price increases, but in the lower price ranges only. The market “recovery” is all relative. Inventory is so low that it is hard to say if a slight increase – to a healthy level of exchange – might level out or even reduce prices again.
The national housing market is becoming less unhealthy, as I reported in several blog posts last week. That’s good because we need it to improve for all sorts of reasons. But without 15 million sub-prime borrowers being pumped into the bottom and mortgage lending practices going haywire again, the market isn’t going to boom like it did in 2005-06. And, that’s probably a good thing for all of us.
Buying or selling a home in Flagstaff has never been more complex. When you’re ready, give us a call at 928.714.0001 or get acquainted with our Flagstaff homes website. We’re part of the international RE/MAX network and delighted to give Flagstaff the best local real estate service.
A gauge of confidence among home builders declined in March to the lowest level since October
The National Association of Home Builders/Wells Fargo housing-market index decreased to 44 in March from 46 in February for a second month of declines. The last time so-called “Builders’ Confidence” index reached above a reading of 50 was in 2006. Readings over 50 indicate that more builders see sales conditions as good than poor.
The housing market is beginning to recover and the Flagstaff rental market is hot
One of my favorite real estate columnists offers a good overview of the initial questions you should address when you think about real estate as part of your retirement portfolio. Paying down your mortgage may be enough of an investment for most people’s retirement portfolio, but if you’re thinking of a bit more risk and reward, read this and then contact me about Flagstaff real estate.