Ap Real Estate – August 5, 2010
WASHINGTON – Mortgage rates dropped to the lowest level in decades for the sixth time in seven weeks, offering the most attractive opportunity for those who qualify to refinance or purchase a home.
Government-controlled mortgage buyer Freddie Mac said Thursday that the average rate for 30-year fixed loans this week was 4.49 percent, down from 4.54 percent last week. That's the lowest since Freddie Mac began tracking rates in 1971.
The average rate on the 15-year fixed loan dropped to 3.95 percent, down from 4 percent last week and the lowest on record.
Rates have fallen since spring as investors seek the safety of U.S. Treasury bonds. That has lowered the yield on Treasurys. Mortgage rates tend to track those yields.
The last time home loan rates were lower was during the 1950s, when most mortgages lasted just 20 or 25 years.
Low rates have sparked some activity in the weak housing market, but not a massive boom in refinancing.
Applications to refinance loans increased 1.3 percent and those to purchase homes increased 1.5 percent, according to the Mortgage Bankers Association.
Nevertheless, high unemployment, slow job growth and tight credit have made it difficult for many to purchase homes. The housing industry received a boost this spring when the government offered homebuying tax credits, but housing activity has plummeted since they expired in April.
The number of buyers who signed contracts to purchase homes plunged in June to the lowest level on records dating back to 2001, according to the National Association of Realtors.
To calculate the national average, Freddie Mac collects mortgage rates on Monday through Wednesday of each week from lenders around the country. Rates often fluctuate significantly, even within a given day.
Rates on five-year adjustable-rate mortgages averaged 3.63 percent, down from 3.76 percent a week earlier. Rates on one-year adjustable-rate mortgages fell to an average of 3.55 percent from 3.64 percent.
The rates do not include add-on fees known as points. One point is equal to 1 percent of the total loan amount. The nationwide fee for loans in Freddie Mac's survey averaged 0.7 a point for all loans.
Financial Market Update
This week: markets have a plate full of data to work on but the week has nothing that will over-power the employment report for July that will be released on Friday. Early estimates are for a decline of 87K jobs but somewhat deceiving in that the decline in jobs is census related and some decline due to the annual auto manufacturers layoffs for retooling for the new model year. The unemployment rate is thought to be at 9.6% up 0.1% frm June. Employment is obviously key, the data is subject to interpretation and generates debate between those that know unemployment is much higher than the headline data and those that know that employment is a lagging indicator and doesn't improve until well into recovery. This time, in this recession, it is different; many of the lost jobs will not re-appear for a long time. Markets begin the week with the same debate; although the earnings have been solid and fuel economic improvement ideas, it begs the question who is buying the products that manufacturers are producing? Housing continues to show little improvement and there is increasing recent concern that deflation is the new giant to be slain.
Market update & advice from our brokerage
Following is my monthly real estate update for San Diego County. Please note that the data does not apply to any other area and is a macro picture for our local conditions. Upon request it is possible for me to create micro versions for specific zip codes or neighborhoods which are very important for buying or selling situations as there often are variations in market behavior between locations within this, or any other, market area.
Detached Homes: There are currently 8,132 homes on the market as compared to 7,669 a month ago and 7,057 on June 1. This is an approximate increase in available properties of 15% over the last 60 days. 1,645 new escrows opened in July as compared to 1,802 in June and 1,677 in May. As many of you know I believe the most accurate indicator of a real estate market's health is the turnover time, i.e. how long will it take to sell all of the current inventory at current sales rates? We now have 4.9 months of supply vs. 4.3 last month. In addition to the 1,645 units that went into escrow (some equity sales, some short sales that received approvals) another 2,345 units went "contingent" (short sales that accepted an offer but need to wait for the lenders to approve). Combining these 2 numbers means that 3,990 detached homes went off the market in July of the total 8,132 that were available. This shows us a 2.04 month supply overall which is still in the seller's favor.
Attached Homes: There are now 3,916 detached units on the market as compared to 3,640 last month and 3,360 two months ago, about a 20% increase over the last 60 days. 858 new escrows opened in July vs. 875 in June and 876 in May. Using only the pending sales as a measurement we now have 4.6 months of supply, a neutral range. During July another 1,771 homes went "contingent" as compared to 1,892 the month prior. Combining the new pendings and new contingents shows us that 2,629 detached units went off the market to buyers in July. Dividing this into the 3,916 units on the market shows us that we have 1.49 months of inventory and a strong market.
In summary, even though the inventory increased and the number of new escrows decreased in July the market is still performing in a neutral range when you consider only the new escrows opened but is in a fairly strong range when you include the new contingent sales (some of which will close, some won't).
Of the 12,048 total detached and attached homes now on the market our MLS indicates that 2,339 are short sales and 955 are bank owned properties. Since about 25% of the inventory is distressed currently I think it is fair to say that the number of bank owned properties is down as lenders try to do short sales instead but that any seller who is serious about selling must still price their property to compete with the best distressed properties.
R. Ungar, Associate Broker – Keller Williams Realty
Detached Homes: There are currently 8,132 homes on the market as compared to 7,669 a month ago and 7,057 on June 1. This is an approximate increase in available properties of 15% over the last 60 days. 1,645 new escrows opened in July as compared to 1,802 in June and 1,677 in May. As many of you know I believe the most accurate indicator of a real estate market's health is the turnover time, i.e. how long will it take to sell all of the current inventory at current sales rates? We now have 4.9 months of supply vs. 4.3 last month. In addition to the 1,645 units that went into escrow (some equity sales, some short sales that received approvals) another 2,345 units went "contingent" (short sales that accepted an offer but need to wait for the lenders to approve). Combining these 2 numbers means that 3,990 detached homes went off the market in July of the total 8,132 that were available. This shows us a 2.04 month supply overall which is still in the seller's favor.
Attached Homes: There are now 3,916 detached units on the market as compared to 3,640 last month and 3,360 two months ago, about a 20% increase over the last 60 days. 858 new escrows opened in July vs. 875 in June and 876 in May. Using only the pending sales as a measurement we now have 4.6 months of supply, a neutral range. During July another 1,771 homes went "contingent" as compared to 1,892 the month prior. Combining the new pendings and new contingents shows us that 2,629 detached units went off the market to buyers in July. Dividing this into the 3,916 units on the market shows us that we have 1.49 months of inventory and a strong market.
In summary, even though the inventory increased and the number of new escrows decreased in July the market is still performing in a neutral range when you consider only the new escrows opened but is in a fairly strong range when you include the new contingent sales (some of which will close, some won't).
Of the 12,048 total detached and attached homes now on the market our MLS indicates that 2,339 are short sales and 955 are bank owned properties. Since about 25% of the inventory is distressed currently I think it is fair to say that the number of bank owned properties is down as lenders try to do short sales instead but that any seller who is serious about selling must still price their property to compete with the best distressed properties.
R. Ungar, Associate Broker – Keller Williams Realty
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