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  • What To Consider When Buying A Fixer-Upper

    In your imagination it seems like a great idea - you purchase an older run-down property and you have the chance to fix it up and turn it into the home of your dreams. What To Consider When Buying A Fixer-Upper

    To Renovate, Or Not To Renovate

    However, the renovation project that is simply a quick montage in your imagination will actually take several months or years and thousands of dollars in real life.

    The concept of renovating a "fixer-upper" property is exciting, but the reality is a lot of work and investment. How can you make sure that you are making the right choice for you?

    One of the main advantages of buying a fixer-upper property is that you will usually be able to get the property for a much cheaper price. But is it worth it for the amount of time and money you will need to invest in the property?

    Here Are Some Questions You Should Be Asking Yourself When Making Your Decision:

    • Do you (or your friends and family members) have the skills to be able to perform most of the renovations yourself? If you do the labour yourself, you will be able to save thousands of dollars that you would have spent hiring contractors, which will make the renovation a much more profitable project.
    • Are you comfortable with the idea of living in a construction zone, perhaps for several months or more? There will be dust and noise everywhere and you might have to cope without a kitchen or a shower for a while.
    • Make sure that you have a thorough inspection of the home performed so that you can see whether the home has a sturdy foundation, good wiring and plumbing, etc. If your inspection reveals any structural issues or water damage, you might be in for more than you bargained for. You need to start with a house that has "good bones".
    • If the home has serious structural, plumbing or wiring problems you should stay away – these repairs are very expensive but "invisible", so you are unlikely to recoup your costs when you sell the home.
    • Add up the estimated costs for renovating the property along with the cost of the home – does it still work out to be a better deal or would you be better off buying a new property.
    • What is your strategy for financing the renovations? If your only option is putting it on the credit card, you might want to think twice because this is a very high interest option.

    Buying a fixer-upper property can be a great investment and can give you the opportunity to transform a run-down old house into the property of your dreams. However, make sure you that you consider the choice carefully before making your decision.

    For more information about about buying or selling a fixer-upper or any questions regarding real estate, contact your trusted real estate professional. 

    BOB ELLIOT - REALTOR® CRS, GRI, e-PRO, CDPE
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  • What's Ahead For Mortgage Rates This Week - February 24, 2014

    Last week's economic data supported recent reports indicating that housing markets are slowing, The National Association of Home builders/Wells Fargo Home Builders Index (HBI) dropped by 10 points to a reading of 46 for February.

    Home builder confidence dropped to its lowest reading in nine months,  and fell below the benchmark of 50, which indicates that more builders are pessimistic about current market conditions than not. What's Ahead For Mortgage Rates This Week February 24, 2014

    Severe weather was blamed for the lower builder confidence reading, which fell below the expected reading of 56.

    Regional readings of builder confidence were also lower:

    • Northeast: Builder confidence fell from 41 to 33 points. This suggests that weather is a major concern as this area has experienced a series of nasty winter storms.
    • South: The HBI reading fell from 50 in January to 46 in February and was the smallest decline among the four regions. Fewer index points lost in the South appears to support builder's concerns about bad weather in other regions.
    • Midwest: Builder confidence dropped from 59 points to a reading of 50.
    • West: Builder confidence fell by 14 points to February's reading of 57. Desirable areas in the West had been leading the nation in home price appreciation. February's reading may signal an easing of buyer enthusiasm as rapidly rising home prices have reduced affordable options for first-time and moderate income buyers.

    Builders also cited concerns over labor and supplies as reasons for lower confidence readings.

    Housing Starts Lower, Mortgage Rates Higher

    On Wednesday, Housing Starts for January were released. Although analysts predicted a figure of 945,000 housing starts as compared to an upwardly adjusted 1.05 million housing starts in December, only 880,000 housing starts were reported for January.

    The Department of Commerce also cited extreme winter weather as a cause for the drop in housing starts, which reached their fastest pace since 2008 in November. There is some good news. Economists said that housing starts delayed during winter could begin during spring.

    According to Freddie Mac's weekly survey, average mortgage rates rose across the board. The rate for a 30-year fixed rate loan rose by 5 basis points to 4.33 percent. The average rate for a 15-year fixed rate mortgage rose by two basis points to 3.35 percent.

    The average rate for a 5/1 adjustable rate mortgage moved up by three basis points to an average rate of 3.08 percent. Discount points for all three products were unchanged with readings of 0.70 for 30-year and 15-year fixed rate mortgages and 0.50 percent discount points for 5/1 adjustable rate mortgages.

    The Bureau of Labor Statistics reported that weekly jobless claims came in at 336,000 against expectations of 335,000 new jobless claims. The prior week's reading was for 339,000 new jobless claims. Analysts said that job growth may be slowing after last year's growth, but also noted that winter weather had slowed hiring in labor sectors such as construction and manufacturing.

    Existing home sales fell by 5.10 percent in January according to the National Association of REALTORS®, which reported a seasonally-adjusted annual rate of home sales at 4.62 million sales against expectations of 4.65 million and December's reading of 4.87 million sales of pre-owned homes. The national average home price rose to $188,900, which was 10.70 percent higher year-over-year.

    January's inventory of available existing homes was 1.9 million homes; this represented a 4.90 month supply of existing homes for sale. Real estate pros prefer to see at least a six month inventory of available homes for sale.

    What's Ahead

    Next week brings a series of economic reports and opportunities for good news. The Case Shiller Home Price Indices, FHFA Home Price Index will be released. Consumer Confidence and the University of Michigan's Consumer Sentiment report along with New and Pending Home Sales reports round out next week's scheduled news.

    BOB ELLIOT - REALTOR® CRS, GRI, e-PRO, CDPE
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  • Smart Ways To Create Equity Within Your Home

    Home equity is the difference between what your home can sell for and what you owe on it. Generally, the longer you own your home, the more equity you build. Smart Ways To Use The Equity In Your Home

    This is money you can use before you sell your home through a home equity loan. Just keep in mind that a home equity loan is secured with your home. If you can't make the payments, you can lose your home.

    Use Your Home Equity In Smart Ways:

    1. Remodel Your Home - If you've wanted to add on a family room or modernize your kitchen, consider using your home's equity to fund the project. Home improvements usually increase your home's marketability and value.
    2. Make Needed Major Repairs - Your home's equity can be a funding source for major repairs like plumbing problems and re-roofs. Once again, this is an improvement for your home that will help keep its value up.
    3. Buy Another Property - Real estate is still a safe investment. You can use your home equity to buy a second property when home values are down. When the market recovers, you can sell the investment property for a profit. This also works if you have to move out of town and are still trying to sell your home. If you can afford the payments, use your home's equity to purchase your new home until the current one sells.
    4. Pay For Unexpected Medical Expenses Or Job Loss - You never know when a medical emergency or job loss will leave you in debt. A home equity loan can give you the money you need to get through this difficult time.

    It's easy to build equity in your home when you find the right deal. Let me help you find your perfect home and negotiate a great price and terms for you. Contact your real estate professional today.

    BOB ELLIOT - REALTOR® CRS, GRI, e-PRO, CDPE
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  • What's Ahead For Mortgage Rates This Week - February 18, 2014

    Last week's economic news was dominated by the first address by the new Fed chairperson, Janet Yellen. What's Ahead For Mortgage Rates This Week - February 18, 2014

    Tuesday's news included the Jobs Openings report for December 2013, which matched November's reading of 4.0 million jobs available.

    This information was taken from a gauge of competition for available jobs; in December, competition for job openings fell to its lowest level in five years.

    Fed Chair Janet Yellen's First Address to House

    Janet Yellen addressed the House Financial Services Committee for the first time on Tuesday as Chair of the Federal Reserve.

    Ms. Yellen indicated that she expected "a great deal of continuity" in terms of Federal Open Market Committee (FOMC) monetary policy direction, and noted that markets should expect the FOMC to continue its support of low interest rates.

    Chairman Yellen emphasized that the FOMC's current tapering of its quantitative easing program was expected to continue, but is not on a pre-determined course.

    If economic conditions change, the Fed's monetary policy would be adjusted according to such developments.

    Mortgage Rates Mixed According To Freddie Mac

    According to Freddie Mac's weekly Primary Mortgage Market Survey (PMMS), the average rate for a 30-year fixed rate mortgage rose to 4.28 percent from the prior week's 4.23 percent.

    The average rate for 15-year fixed rate mortgage mortgages was unchanged at 3.33 percent. The average rate for a 5/1 adjustable rate mortgage dropped from 3.08 percent to 3.05 percent.

    Discount points for each category were unchanged at 0.70 percent for fixed rate mortgages and 0.50 percent for 5/1 adjustable rate mortgages.

    In other news, Weekly Jobless Claims were higher last week at 339,000 against a forecast of 330,000 new jobless claims and the prior week's reading of 331,000 new jobless claims.

    Analysts cited bad weather and the possibility of slower economic growth as factors, but said that it was too soon to tell if economic growth is slowing down.

    The University of Michigan's Consumer Sentiment Index beat expectations with a reading of 81.2 against expectations for a reading of 80.0. February's reading was unchanged from January.

    What's Coming Up

    This week's economic news includes the NAHB Home Builder's Housing Market Index on Tuesday. Wednesday's events include Housing Starts and the minutes from January's FOMC meeting.

    In addition to Freddie Mac's PMMS, Thursday's scheduled reports include Weekly Jobless Claims, the Consumer Price Index (CPI) and Core CPI. Leading Economic Indicators (LEI) for January will also be released.

    The National Association of REALTORS® will release data for existing home sales in January on Friday.

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  • Ready To Buy Your First Home, Here Is Your Quick Checklist

    Buying your first home is a major milestone in your life, similar to graduating high school or moving out of your parent's house. Ready To Buy Your First Home, Here Is Your Quick Checklist

    When you buy a property, you are making a long-term investment decision in your future and potentially taking the first step toward your future financial security.

    However, buying a house before you are ready can actually be a negative move that puts a cramp in your plans.

    It is important to assess where you are in life, so that you know whether or not it's the right time to buy a house.

    Some people buy their first home at 21, others at 30 and some might continue to rent for the rest of their lives – the decision depends on personal circumstances. But how can you determine for yourself whether you are ready?

    You Have All Of  Your Finances In Order

    Is your credit score looking healthy? Have you paid off your credit card debt, student loans or personal loans?

    If not, it is important to clean up your finances and pay down your debts before you start looking for a home, or you will be adding a mortgage on top of the debt before you are able to handle everything.

    You Have Enough Savings For A Down Payment

    Just because you can buy a home for as little as 3.5% down payment, doesn't mean that you should. You will have your dream home, but your mortgage payments will be so high that you won't have any money left over for repairs or improvements.

    Also, you will end up paying thousands of dollars more in interest over the length of the loan. The bigger down payment you can save, creating equity in your home, the better.

    You Are Earning Enough To Comfortably Afford The Mortgage Payment

    Financial experts recommend that you never take a monthly payment that is more than 25% percent of your take home pay – including taxes and insurance.

    Stretching yourself thinner will leave you little room for error and if your income drops for any reason – you will quickly find yourself in hot water.

    You Are Happy To Settle In One Place

    Could you see yourself settling in this location for the long term, or are you still considering moving elsewhere in the country or living abroad?

    Buying a home is a long-term investment, so if you think that you might possibly move somewhere else in the next five years, you might want to think twice about buying a home and rent instead.

    These are just a few of the signs that you are ready to purchase your first property. For more information, contact your trusted real estate professional.

     

    BOB ELLIOT - REALTOR® CRS, GRI, CDPE
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  • How To Emotionally Detach From Your Home When Selling

    Let's face it, selling your home can be an emotionally difficult process – especially if you have lived there for a long time. When you make a house your home, it holds many of your memories and it becomes a part of your identity. How To Emotionally Detach From Your Home When Selling

    How can you sell the house in which your child took their first steps, where you held many dinner parties and where your family celebrated so many birthdays and holidays together?

    You will go through a period of transition when moving house, which can be mentally and emotionally tiring.

    It might be hard to sell your home, but time marches on and eventually it is time to move to a different location or simply downsize or up-size to suit your changing family situation.

    The problem with being too emotionally attached to your home is that it makes it difficult to sell. When you have a sentimental attachment to your home you will estimate its value as higher than it really is and you will have trouble accepting counter offers.

    Which could mean that your home is on the market for a long time when it could possibly have been sold for a reasonable price.

    Here are some tips for emotionally detaching from your home so that it is easier to sell:

    Remove Your Personal Items

    Taking any of your personal items out of the house will make it a lot easier to sell, because the buyer will be able to imagine a blank slate filled with their items instead. Also, it will make the process easier on you if you can remove your family photos, keepsakes and personal items - because it will make the house feel less like yours.

    Think About Your New Home

    Whether or not you have already bought your next property, it's time to start thinking about it as your new home. It will take some time, but you can transfer that emotional connection to the new place where you will live.

    Start to focus on all of the things that you are looking forward to about living in your new home.

    Preserve A Record Of Your Old Home

    Take photos and even make a video tour of your old home before you move - so that you can always remember where you used to live.

    Get An Outside Opinion

    Ask your real estate agent or a professional home stager to take a look at your home with unbiased eyes to let you know what you should change to help it sell faster.

    They might tell you to eliminate the jungle wallpaper in your son's bedroom that you love - but they are probably correct in a way that you can't see because your emotions cloud your judgment.

    With these tips, you should be able to emotionally detach from your old home, so that it is easier to sell. For more information contact your real estate professional.

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  • What's Ahead For Mortgage Rates This Week - February 10, 2014

    Residential Construction Spending Up

    Last week's mortgage and housing-related reports began with Construction Spending for December, with a reading of 0.10 percent or a seasonally adjusted $930.5 billion. December's reading fell short of an expected increase of 0.40 percent. What's Ahead For Mortgage Rates This Week - February 10, 2014

    Spending for private sector projects rose by 1.00 percent; of this amount, residential construction spending increased by 2.60 percent and private sector spending for non-residential construction fell by -0.70 percent.

    Although construction spending posted a fractional gain, the good news is that construction spending is currently dominated by residential construction and that due to inclement winter weather, any gain in construction spending during December could be considered positive.

    Jobs and Unemployment Data Mixed

    Employment related reports dominated the week's economic reports. The ADP employment report for January indicated that only 175,000 new private sector jobs were added for the lowest reading in five months.

    December saw 227,000 new jobs. Severe weather conditions were the cause of lower than expected jobs growth. Month-to-month job reports can be unpredictable, but quarterly results provided positive information as the three month period ended in January 2014 saw average monthly job growth of 230,000 jobs as compared to an average reading of 220,000 jobs added during the same period a year ago.

    New Jobless Claims came in at 331,000, significantly less than the prior week's reading of 351,000 new jobless claims, and also lower than the forecasted reading of 337,000 new jobless claims. Analysts said that these readings supported gradual improvement in the economy.

    The Bureau of Labor Statistics (BLS) released its Non-Farm Payrolls report for January, which indicated that 113,000 new jobs were added during the first month of 2014.

    This reading was better than December's reported 75,000 jobs added, and suggested to economists that bad weather was not the underlying cause of the dip in jobs growth. Healthcare and government sectors cut jobs in January.

    With lower job growth, a higher unemployment rate would seem likely, but the national unemployment rate dropped to 6.60 percent from last week's reading of 6.70 percent.

    The Federal Reserve's FOMC Committee has established a benchmark reading of 6.50 percent as one of the economic indicators it uses in decisions concerning federal stimulus programs.

    Readings for labor and unemployment are important for the overall economy and housing markets; consumers worried about jobs that they might lose or jobs they cannot find likely won't be buying homes in the near term.

    Mortgage Rates Drop

    According to last week's Freddie Mac's Primary Mortgage Market Survey, average mortgage rates dropped across the board. The reported rate for a 30-year fixed rate mortgage was 3.23 percent, down from the prior week's 3.32 percent. Discount points were unchanged at 0.70 percent.

    The rate for a 15-year fixed rate mortgage fell by seven basis points to 3.33 percent. Discount points ticked upward from 0.60 to 0.70 percent. The rate for a 5/1 adjustable rate mortgage fell by four basis points to 3.08 percent with discount points unchanged.

    What's Coming Up This Week

    This week's scheduled economic news includes Weekly Jobless claims, Freddie Mac's report on average mortgage rates, along with retail sales and retail sales except automotive sales.

    The University of Michigan Consumer Sentiment report will be released Friday.

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  • Conducting Your Own Home Energy Audit

    If your monthly energy bill has started to make you cringe, then it might be time to conduct an energy audit on your home. Hiring a professional can cost you a pretty penny. So save the dough and examine your home yourself.

    With a few tools and the tips below, you can identify problem areas that could be costing you every month. Conducting Your Own Home Energy Audit

     Energy Bills

    Analyze last year’s energy bills. Each statement should itemize the energy you use each month in kilowatts. Note any spikes that could indicate problems with one of your appliances or the structure of your home.

    Call your energy provider and ask what the average cost is for a home of your size in your area. Then determine how extensively you need to conduct your energy audit.

     Air Leakage

    Warm or cool air escaping from your home can cost you more money and overstress your appliances. To search for cracks that air might be seeping through, light an incense stick and walk into each room of your home on a windy day. The smoke from the incense stick will highlight problem areas and you can mark them with painters’ tape.

    Heating And Cooling System

    Thoroughly inspect your heating and cooling equipment. Most homeowners neglect to follow appliance manufacturers’ recommendations of doing this once a year. Make sure your system is working properly.

    Change filters and examine ductwork. If your appliances are older than 15 years, consider replacing it with a newer, more energy-efficient model.

     Insulation

    Go up into your attic and check for insulation. If the insulation covers the joists, then there is probably enough to protect your home. Remove light sockets and use a flashlight to see if your walls have been insulated.

    If not, you might want to have insulation blown in. Look for any stained or damaged insulation. This could be a sign of exterior leaks that need to be fixed.

     Lighting

    According to Energy.gov, lighting accounts for around 10% of energy usage. As part of your energy audit, reduce your use by replacing inefficient bulbs with incandescent or light-emitting diode (LED) bulbs.

    Consider using lower-wattage bulbs in rooms that get a lot of sunlight and only turning on table lamps instead of overhead lighting at night.

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  • What Is DOM And How It Affects Your Home For Sale

    Oh, the dreaded/happy DOM question: "How long has this house been up for sale?" If it's your home for sale we're talking about, you're probably wondering about the split "dreaded/happy" bit. For that matter, whether you're a buyer or a seller, you're probably asking, "what the heck is 'DOM'?"DOM - What It Is And How It Affects Your Home For Sale

    Days On Market

    "DOM" is the shortened industry term for Days On Market, used by the multiple listing services. It's exactly what it sounds like: the number of days your home for sale has been on the market. This metric covers the time it actually goes on sale to the time the deal is closed.

    Why Is DOM Important?

    Remember the "dreaded/happy" part at the beginning of this article? As a buyer's agent, I might gleefully answer, "Fifty days." I say "gleefully," because a house that has sat on the market for a long time is a good thing for my client.

    The seller is probably more eager to sell than a month before, and is most likely willing to work a deal. An eager seller makes a happy buyer in most cases.

    On the other hand, as a seller's agent, I might not be so happy about it, and for the same reason. My seller is now an eager seller. I want to get the best deal for my client, but I know the buyer has the upper hand. It is then up to me to help my client get the home sold without giving away the barn, the pool, the tool shed and the tools.

    Already, you may be beginning to understand how the DOM metric can affect the sale of your home.

    The problem with the DOM metric is that it causes buyers and agents to build false assumptions. If a home has been on the market for an above-average length of time, we start to wonder, "what's the matter with that listing?" Even though I know there are other reasons for a home to go static and not sell, many people automatically think there's something wrong.

    Reasons For An Extended DOM Metric:

    • The Home May Be Overpriced – Nothing is wrong with the property itself; it's just priced too high.
    • Testing The Market – Although it's a big mistake and agents will tell you so, some sellers test the market by throwing a high price on a home they don't care if they sell – just to see if somebody is foolish enough to take it.
    • Sticking To Your Guns – Often, sellers get fixed on a price and won't budge, come hell or high water. They figure they can wait around until the market can meet their price, not the other way around.
    • Renovations – Sometimes, a home will go on the market in the middle of renovations. The sellers aren't ready to let the home be seen, so it just sits there.
    • Availability – A growing problem is the lack of access to a home for sale. Sadly, agents and FSBOs alike seem to be unavailable when a buyer wants to view the home. Obviously, no viewing means no sale.

    Don't let your DOM get high because of simple mistakes. If you're serious about selling your home, remember the five reasons above and make sure you aren't doing them.

    If you're ready to sell your home with a professional who understands how to keep the DOM to a minimum, contact your real estate professional today.

    For more information Bob Elliot Real Estate Today 

  • FOMC Statement Shows Tapering Of Quantitative Easing Purchases

    According to a statement provided by the Federal Open Market Committee of the Federal Reserve, the committee has approved another reduction of the Fed's monthly asset purchases.

    The adjustment will be made in February and cuts monthly purchases of mortgage backed securities from $35 billion to $30 billion and monthly purchases of Treasury securities from $40 billion to $35 billion.

    FOMC began reducing its asset purchase under its quantitative easing program in January, when the monthly purchases of mortgage-backed securities and Treasury securities was reduced from $85 billion per month to $75 billion.

    Citing its goals of maximum employment and price stability, the FOMC said that it has seen consistent improvement in the economy and specifically mentioned a lower, but still elevated unemployment rate. The statement also indicated that the FOMC expected labor markets to improve. 

    FOMC Asset Purchases: How They Impact Mortgage Rates

    The Fed initiated the QE program in an effort to control rising long-term interest rates, which include mortgage rates. Yesterday, the FOMC statement said that Fed expects its purchases of longer-term assets will continue to control long-term interest rates and mortgage rates while supporting mortgage markets.

    FOMC's statement reported that it sees the risks to its economic outlook and the labor market as having become nearly balanced. The FOMC is still looking for inflation to reach its 2.00 percent goal.

    Fed Monetary Policy To Remain "Highly Accommodative"

    The Fed intends to maintain a highly accommodative stance on monetary policy after the QE asset purchases end and the economy is significantly stronger. The current Federal Funds Rate of between 0.00 and 0.250 percent will be maintained at least until the national unemployment rate drops below 6.50 percent. FOMC Statement Shows Tapering Of Quantative Easing Purchases

    FOMC members reaffirmed their commitment to monitoring economic indicators as part of any decision to alter current QE measures or the Federal Funds Rate. 

    Indicators Mentioned In The FOMC Statement Include:

    • Additional indicators of labor market conditions
    • Inflationary pressures and expectations
    • Readings on financial developments

    FOMC statements have consistently included the committee's assertion that no arbitrary benchmark alone will be sufficient for the committee to change either QE asset purchases or the Federal Funds Rate.

    FOMC stated that it will seek a "balanced approach consistent with its longer-run goals of maximum employment and inflation at two percent."

    Although fears of tapering the Fed's monthly asset purchases may persist, it appears that each FOMC decision to reduce asset purchases under the QE program indicates economic growth.

  • What's Ahead For Mortgage Rates This Week - February 03, 2014

    Last week brought mixed news; while the Department of Commerce reported a dip in new home sales, mortgage rates also fell. The Federal Reserve's FOMC statement revealed that quantitative easing would be further reduced by an additional $10 billion monthly.  Whats Ahead For Mortgage Rates This Week February 03 2014

    New Home Sales: Y-O-Y Reading Best Since 2008

    December's reading of 414,000 for new home sales fell short of November's revised reading of 445,000 new homes sold as well as expected sales of $455,000. The consensus figure was based on November's original sales reading of 464,000 new homes sold.

    The inventory of new homes available rose from last month's level of 4.70 month supply to a 5 month supply in December. Cold weather was cited as a cause of lower new home sales.

    New home sales increased by 4.50 percent year-over-year; this was the highest reading since 2008. The median price of a new home rose by 0.60 percent in December to $270,299. 

    The national median home price was $265,800 in 2013, an annual growth rate of 8.40 percent and the highest annual growth rate for median home prices since 2005.

    Economists cited rising mortgage rates, new mortgage rules and a lagging labor market as signs that slower home sales could be expected in 2014.

    Pending home sales echoed the slowing trend in home sales; the index reading fell by -8.70 percent to a reading of 92.4 in December.

    All Four Regions Reported A Drop In Pending Sales As Compared To November:

    Northeast              -10.30 percent

    West                    -9.80 percent

    South                   -8.80 percent

    Midwest                -6.80 percent

    This was the lowest reading for pending home sales since October 2011.

    Case-Shiller: Home Prices Up 13.7%

    The Case-Shiller 10 and 20 city home price indices for November reported a 13.70 percent gain in home prices year-over-year. This was the fastest annual growth rate in home prices since 2006. Further evidence of slower growth in home prices was evident as nine of 20 cities tracked reported lower home prices.

    Fed Continues Stimulus Reduction

    Wednesday's FOMC statement confirmed expectations that the Fed would continue tapering its monthly asset purchases made under its quantitative easing program.

    Monthly purchases of mortgage-backed securities and Treasury securities will be reduced from January's level of $75 billion to $65 billion in February. Economists expected this reduction to occur.

    Freddie Mac's Primary Market Survey reported lower average mortgage rates. The rate for a 30-year fixed rate mortgage fell by 7 basis points to 4.32 percent with discount points unchanged at 0.7 percent.

    15-year mortgage rates also fell to 3.40 percent with discount points lower at 0.60 percent. The average rate for a 5/1 adjustable rate mortgage fell by 3 basis points to 3.12 percent with discount points unchanged at 0.50 percent.

    This was welcome news as homebuyers and mortgage lenders have felt the effects of higher home prices and new mortgage rules that became effective January 10.

    New Jobless Claims Higher

    Weekly jobless claims jumped to 348,000 from the prior week's 339,000 new jobless claims. This was the highest level of new jobless claims in six weeks. Reasons for increased claims were unclear, but were possibly caused by lingering influences of the holiday season or a sinking labor market.

    Consumer confidence rose in January to a reading of 80.7 as compared to December's reading of 77.5 as compared to January 2012's reading of 58.4.

    This Week

    This week's scheduled economic and housing news includes construction spending, non-farm payrolls and the national unemployment rate. Freddie Mac's PMMS report and weekly jobless claims will be released as usual on Thursday.

  • Case Shiller Price Index Shows Homeowners A Rise In Home Equity

    According to the S&P/Case-Shiller 10 and 20-City Home Price Indices released Tuesday, the U.S. Housing Market is on a roll based on year-over-year increases in average home values, but month-to-month results were mixed. Case Shiller Price Index Shows Homeowners A Rise In Home Equity

    The 10 and 20-City Home Price Indices showed year-over-year growth of 13.80 and 13.70 percent respectively.

    Highlights Include:

    • Dallas, Texas posted its highest rate of annual growth since 2000.
    • Chicago's average home price rose by 11.00 percent, its highest annual gain since December 1988.
    • The 10 and 20-City Indices posted their best November home prices since 2005.

    Top year-over-year gains in home prices included Las Vegas, Nevada at 27.30 percent, San Francisco, California at 23.20 percent, Los Angeles, California at 21.60 percent and San Diego, California at 18.70 percent. Atlanta, Georgia rounds out the top five cities with a year-over-year increase in home prices of 18.50 percent.

    The annual readings for the S&P/Case-Shiller 10 and 20-City Housing Market Indices in November suggests that U.S. markets are strong enough to sustain momentum in spite of rising mortgage rates. The month-to-month results show that both indices decreased by an incremental 0.10 percent in November, 2013.

    Keeping in mind the traditional slump in home sales during the winter and holiday season, lower month-to-month readings were neither unexpected nor disappointing.

    Eight of the nine top cities posting the highest month-to-month growth in home prices were located in the Sun Belt. San Diego, California and Minneapolis, Minnesota home prices remained nearly flat after decreasing in October.

    Nine of the 20 cities surveyed posted positive month-to-month growth in home prices. Of the nine cities, only Boston, Massachusetts and Cleveland, Ohio were not located in the Sun Belt.

    S&P/ Dow Jones Index Committee Chairman Expects Slower Growth In 2014

    David Blitzer, Chairman of the Index Committee at S&P Dow Jones Indices, noted that November's month-to-month readings for the 10 and 20-city home price indices indicated that Phoenix, Arizona, Los Angeles California and Las Vegas, Nevada had each posted 20 or more consecutive months of rising home prices.

    While positive in his remarks about increasing home prices, Mr. Blitzer also noted that indicators suggested a slower rate of growth during 2014.

    This aligns with previously released economic news citing uncertainty about mortgage rates that may continue to rise as the Federal Reserve continues tapering its monthly asset purchases under its quantitative easing program.

    The Fed's FOMC meeting is scheduled to end Wednesday, January 29, at which time the committee's customary statement will indicate whether or not the Fed's monthly asset purchases will be reduced from their current level of $75 billion.

    On the positive side, Chairman Blitzer said that the low inflation rate (1.50 percent in 2013) and rising home prices are helping homeowners accumulate home equity at a faster pace.

  • What's Ahead For Mortgage Rates This Week - January 27, 2014

    Last week was an action-packed week for economic news, and all of it was packed into Thursday:  What’s Ahead For Mortgage Rates This Week – January 27, 2014

    Weekly Jobless claims came in at 326,000 which was lower than the expected 330,000 new claims. This week's claims were higher than the prior week's 325,000 new jobless claims filed.

    The NAR released its Existing Home Sales Report for December; sales of existing homes sold at a seasonally adjusted annual rate of 4.86 million.

    December's reading fell shy of estimates of 490 million existing home sales, but the estimate was based on November sales that were later adjusted downward to 4.82 million sales of existing homes. Existing home sales for 2013 came in at 5.09 million sales, a 9.10 percent increase over 2012 sales.

    The median price of a pre-existing home reached $198,000 in December, with the median price for all of 2013 at $197,100, which was an increase of 11.50 percent over the average price for an existing home in 2012.

    Pent-up demand and a lingering shortage of available homes likely contributed to last year's rapid rise in home prices.

    Mortgage Rates Mixed, FHFA Reports Slower Gain For Home Prices

    Freddie Mac reported mixed results for average mortgage rates in its weekly PMMS report. The rate for a 30-year fixed rate mortgage fell from last week's 4.41 to 4.39 percent.

    The average rate for a 15-year mortgage dipped by one basis point to 3.44 percent; discount points for both 30 and 15-year mortgages were unchanged at 0.70 percent.

    The average rate for a 5/1 adjustable rate mortgage rose from 3.10 to 3.15 percent with discount points unchanged at 0.50 percent.

    FHFA, the agency that oversees Fannie Mae and Freddie Mac, released its Home Price report for November 2012. This report is based on information gathered about homes with mortgages owned or backed by the two firms. According to FHFA, home prices increased by 7.60 percent year-over-year.

    Home prices moved up by 0.10 percent in November as compared to a rate of 0.50 percent in October.

    Leading Economic Indicators Suggest Economy Strengthening

    The Leading Economic Indicators report for December moved up by 0.10 percent, which pushed the index to a reading of 99.4. December's reading represented the sixth consecutive month that the index gained ground.

    Economists associated with the LEI report note that while steady growth is expected during the spring, the economy will likely encounter a few obstacles including rising interest rates and possible political gridlock over raising the national debt ceiling.

    This Week

    This week's economic news is set to include New Home Sales, the Consumer Confidence Index, and Weekly Jobless Claims. Freddie Mac's PMMS mortgage rates and reports on consumer spending and consumer sentiment round out the week's news.

    The FOMC statement expected after the committee concludes its meeting on Wednesday is expected to provide news of the Fed's plan for further tapering of its quantitative easing program.

  • Existing Home Sales Reach Highest Level In 7 Years

    The NAR provided great year-end news as existing home sales in December pushed 2013 sales of existing homes to a 7 year high. December's reading of 4.86 sales of pre-owned homes came in at 4.87 million on a seasonally adjusted annual basis. Existing Home Sales Reach Highest Level In 7 Years

    Although projections had been for 4.89 million sales, the December reading topped November's revised sales of 4.82 million pre-owned homes.

    December's reading showed the first gain in existing home sales in three months. NAR reported that existing home sales for 2013 reached 5.09 million, which represented a 9.10 percent increase over 2012.

    More Good News: Median Price Of Existing Homes Rises

    NAR reported that the national median price for pre-owned homes increased to $198,000, a year-over-year increase of 9.90 percent. The average price of an existing home for all of 2013 was $197,100. This was the strongest growth in existing home prices since 2005 and represented an increase of 11.50 percent.

    There were 1.86 million pre-owned homes for sale in December. At current sales rates, this represents a 4.60 month inventory. Real estate pros like to see a minimum of a six-month supply of available homes, so existing homes remain in short supply.

    Analysts attributed rising home prices to improving economic conditions and a persistent shortage of homes for sale.

    FHFA: Slower Gain for Home Prices In November

    FHFA, the agency that oversees Fannie Mae and Freddie Mac, reported that November prices of homes financed with mortgages owned or guaranteed by the two agencies rose by a seasonally adjusted 0.10 percent as compared to October's increase of 0.50 percent and an expected growth rate of 0.40 percent.

    November's reading brought year-over-year home sales to an increase of 7.60 percent, but is still 8.90 percent below their April 2007 peak.

    Analysts noted that recent reports of increasing new home construction and rising new home sales as reasons why prices of existing homes are seeing slower growth.

  • What's Ahead For Mortgage Rates This Week - January 13, 2014

    The first post-holiday week of 2014 brought mixed economic and housing-related news. CoreLogic reported via its Housing Market Index that November home prices grew by 11.80 percent year-over-year.

    This was just shy of October’s year-over-year reading of 11.90 percent. As with Case-Shiller’s recently reported Home Price Indices, a slower rate of home price growth suggested to analysts that the housing market is cooling down.

    The Federal Reserve’s Federal Open Market Committee released the minutes from its December meeting. The minutes reiterated the Committee’s decision to begin tapering its asset purchases this month.

    The Fed announced that it would reduce its monthly asset purchases by $10 billion to $75 billion. As always, the Fed indicated that it would continue monitoring economic data for determining future actions concerning monetary policy.

    Mortgage Rates Mixed

    Freddie Mac’s Primary Market Survey reported mixed results for average mortgage rates last week. The rate for a 30-yer fixed rate mortgage dropped to 4.51 percent from 4.53 percent with discount points lower at 0.70 percent; the rate for a15-year fixed rate mortgage was 3.56; this was one basis point higher than for last week.

    Discount fell from 0.70 to 0.60 percent. The rate for a 5/1 adjustable rate mortgage jumped by 10 basis points to 3.15 percent with discount points unchanged at 0.50 percent.

    Employment, Unemployment Data Mixed

    The week’s jobs-related readings provided mixed readings for the labor sector. The ADP Employment report for December showed 238,000 private sector jobs added and matched expectations of 215,000 new private sector jobs. December’s reading also exceeded November’s reading of 229,000 jobs added.

    The Bureau of Labor Statistics released the Non-Farm Payrolls report for December; it reported 74,000 jobs added in December against expectations of 193,000 new jobs and November’s reading of 241,000 jobs added.

    The sharp drop in new jobs during December was partially blamed on poor weather, but analysts also said that it could be a sign of further ups and downs in the U.S. economy.

    In a statement given in connection with the December Non-Farm Payrolls report, St. Louis Federal Reserve Bank President James Bullard, a member of the FOMC, said that he did not expect the Fed to stop tapering its asset purchases due to December’s sharp drop in new jobs.

    The national unemployment rate improved to a reading of 6.70 percent. This was the lowest reading in five years and only two-tenths of a percent above the FOMC’s targeted unemployment rate of 6.50 percent. 347,000 workers left the workforce, which helps to explain the discrepancy between the lower number of new jobs and the lower unemployment rate.

    This Week

    This week’s scheduled economic news includes retail sales and retail sales except autos, the Federal Reserve’s Beige Book report, Weekly Jobless Claims, Freddie Mac’s PMMS. The NAHB Home Builders HMI and the Housing Starts report will also be released. Friday’s release of the University of Michigan’s consumer sentiment index rounds out the week.

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