11 Apr 2019
By Kevin Gahagan

FOMC Minutes Reveal Fed Policymakers U-Turn

Real Estate

FOMC Minutes Reveal Fed Policymakers U-TurnMembers of the Federal Reserve’s Federal Open Market Committee voted to hold the target range of the federal funds rate to its current range of 2.25 to 2.50 percent. The minutes of the most recent Committee meeting cited softening domestic and global economic conditions as reason for not raising the target federal funds range.

While labor markets remained strong, the minutes noted that household spending and business investment slowed in the first quarter of 2019. FOMC members expected Gross Domestic Product growth to slow as compared to its 2018 pace.

While current inflation and the national unemployment rate fell in line with the Fed’s dual mandate of seeking maximum employment and price stabilization, inflation fell due to falling fuel prices. The meeting minutes said that the Committee would be patient as it determined which, if any, action would be appropriate regarding the federal funds rate.

Strong Labor Sector Indicators Offset Lower GDP

Labor sector indicators remained strong with a national unemployment rate of 3.80 percent; labor force participation rose and the ratio of employment to population also rose. Strong employment and consumer sentiment readings suggested that more households may transition from renting to buying homes. Home sales recently fell due to affordability issues and rising mortgage rates.

Factors influencing FOMC monetary policy decisions include labor market conditions, inflation expectations and readings on domestic and international financial developments. The meeting minutes noted that near-term adjustments to monetary policy were dependent on changes to current economic outlook according to emerging data. The Committee consistently says that monetary policy positions can change according to developments in global and domestic economic data.

Fed Chair‘s Press Conference

Federal Reserve Chairman Jerome Powell said during his post-FOMC meeting press conference that the Committee’s “wait and see” stance on raising the target range of the federal funds rate was based on information received since growth expectations based on 2018’s economic growth rate of 3.10 percent. As of September 2018, the Fed forecasted economic growth of 2.50 percent in 2019, but subsequent information caused the Fed to downwardly revise its growth estimate.

Mr. Powell said that global economic slowing was expected in Europe and China; unresolved issues including Brexit and ongoing trade negotiations were given as reasons for slower global economic growth. While domestic and international economic forecasts indicated a modest slowdown in economic growth, Chairman Powell said that overall economic conditions remained favorable.

If you are in the market for a new home or interested in refinancing your current property, be sure to consult with your trusted home mortgage professional.

28 Mar 2019
By Kevin Gahagan

Case-Shiller Home Price Growth Slower in January

Real Estate

Case-Shiller Home Price Growth Slower in JanuaryHome price indices issued by S&P Case-Shiller showed further slowing in home price growth in January. The national home price index showed 4.30 percent home price growth for the three months ended in January. Analysts expected home prices to grow 4.20 percent for the same period in cities surveyed by Case-Shiller. More cities reported declines in home prices than those that posted gains in home prices.

The top cities posting year-over-year home price gains in the 20-City Home Price Index were Las Vegas, Nevada with 10.50 percent growth; Phoenix, Arizona posted a year-over-year home price gain of 7.50 percent. Three cities tied for third place with Charlotte, North Carolina, Minneapolis, Minnesota and Tampa, Florida posting year-over-year home price growth rates of 5.10 percent.

Home Price Growth Stalls Throughout U.S.

Noteworthy in January’s readings were the West Coast’s loss of dominance in home price growth rates and the retreat of double-digit yearly growth rates for home prices. Las Vegas, Nevada posted the only double-digit price gain year-over-year, but it suffered steep declines in home values during the recession. The 20-City HPI for January showed month-to-month home price growth slowed in 14 cities, was unchanged in one city and five cities posted gains in home price growth rates.

David M. Blitzer, managing director and chair of the S&P Case-Shiller Index Committee, said that the home prices had not grown so slowly since April 2015. Rapidly rising home prices sidelined many buyers who could not afford to keep up with home prices that rose faster than inflation and wages. Analysts said that housing markets were leaning in favor of home buyers as home price growth slowed. Mr. Blitzer said that it “remains to be seen if recent low mortgage rates and smaller price gains can sustain improved home sales.”

Federal Reserve policymakers recently announced that the Fed would hold steady on its target federal funds rate range of 2.25 to 2.50 percent; this fueled a drop in mortgage rates. Analysts said that rates could continue to fall. Slower home price growth and lower mortgage rates are expected to encourage would-be home buyers back into the market.

If you are interested in purchasing a new property or refinancing your current property, be sure to contact your trusted home mortgage professional to discuss financing options.

27 Mar 2019
By Kevin Gahagan

Are Multi-Unit Properties the Right Move for You?

Real Estate

Are Multi-Unit Properties the Right Move for YouReal estate isn’t a one-size-fits-all pursuit. Buying and renting multi-unit properties is one of the ways investors build residual income while increasing their property portfolios. However, multi-unit rentals come with some unique challenges. Are you ready to manage a multi-unit rental property?

Ask yourself these questions to help you decide which path best fits your resources, goals, and interests.

Do You Plan To Live On The Property?

Living in one of your rental units offers a myriad of benefits. First, you get to keep a close eye on building conditions and the actions of your renters. Next, you’ll be able to respond quickly to an emergency. Last, you won’t have to pay extra for your own living quarters. You won’t have this option with single-occupancy properties.

Will You Work With A Property Management Company?

If you are more of a hands-off investor, a property management company makes owning properties simple. Their staff will collect the rents, respond to requests for maintenance and repairs, and take care of all the paperwork that comes along with rental units.

All you need to do is collect your portion of the payments and keep up with your bank loans. You can still work with a property management company if you opt for single-family properties. However, it may not be the most cost-effective solution in that situation.

Are Market Conditions In Your Area Changing Quickly?

When rental prices go up, it can be difficult for investors to take advantage. Long-term occupants may balk at the idea of paying more for the same property. With multi-unit buildings, you can raise prices as tenants vacate. In this way, you can keep your current occupants happy without sacrificing potential profits.

Are You Looking For More Ways To Increase Your Income?

Multi-unit properties are a unique opportunity for enterprising investors. Rent out space under stairways or in common areas to vending machine companies. Your residents get convenient snacks and you earn a little extra cash each month. A coin-operated laundry room is another addition that adds value for your residents while increasing your own payouts.

Managing a multi-unit building means more paperwork, maintenance, and marketing. However, the potential profits might be worth it. Take some time to review your own goals and abilities before committing to a purchase.

Be sure to consult with your trusted real estate and mortgage professionals to find out more information about purchasing multi-unit rentals.

26 Mar 2019
By Kevin Gahagan

What Causes Mortgage Interest Rates To Fluctuate?

Mortgage

What Causes Mortgage Interest Rates To FluctuateThe mortgage interest rate represents the cost of borrowing money to purchase a property. Mortgage interest rates are not fixed; that is, they fluctuate from one period of time to the next.

Many different factors play into what your mortgage interest rate will finally turn out to be. Some of these factors have to deal with the economy and government decisions. Other factors have to do with your personal financial situation.

Finally, mortgage interest rates can differ between lending institutions, which is why you may get different mortgage interest rate quotes from different places.

Economic Factors That Cause Mortgage Interest Rates To Fluctuate

Mortgage interest rates are somewhat connected to the stock market. When the stock market indexes go up, mortgage rates tend to rise as well. The Consumer Price Index is a measure of inflation rates. When inflation rises, you can expect to see mortgage interest rates go up, too. Other economic factors that affect mortgage interest rates include Data from the Gross Domestic Product, Consumer Confidence, and Home Sales reports.

Government Decisions That Lead To Mortgage Interest Rate Changes

The federal government keeps close tabs on the economy. Government officials are always making adjustments in order to keep the economy strong. Periodically, the government will raise or lower key interest rates in order to adjust bank lending economics. When the government raises or lowers the Federal Funds interest rate, it is always announced in the media.

Personal Financials And Your Mortgage Interest Rate

Finally, your personal financial situation influences what kind of mortgage interest rate your lender offers. A higher credit score will generally get you a lower mortgage interest rate. This is another reason why it’s always a good idea to review and improve your credit score before applying for a mortgage.

When you are ready to apply for a mortgage, meet with a trusted home mortgage professional. Because mortgage interest rates fluctuate often, you could find that the interest rate gets higher in the short time in which you’re still shopping for your home. Once you do find an attractive program for your personal situation, be sure that you are ready to take the necessary steps to lock in that rate.

 

 

 

20 Mar 2019
By Kevin Gahagan

NAHB: Housing Market Index Flat in March

Real Estate

NAHB Housing Market Index Flat in MarchBuilder sentiment held steady in March as headwinds in housing markets affected homebuilder confidence, but National Association of Home Builders Chairman Greg Ugalde said that builders were looking forward to a “solid spring home-buying season.” Builder sentiment mirrored February’s index reading of 62; analysts expected an uptick to 63.

Any Housing Market Index reading over 50 indicates that more builders than fewer have a positive outlook on housing market conditions. The average reading for 2018 was 67, which indicated that builders were less confident current market conditions for new homes than in 2018.

HMI Component Readings Mixed in March

Three sub-readings used to calculate the monthly Housing Market Index reading showed builder confidence in current market conditions rose two points to 68; Builder confidence in market conditions over the next six months rose three points to 71 and homebuilder confidence in buyer traffic dipped four points to 44. Readings for buyer traffic seldom exceed the benchmark reading of 50.

The National Association of Home Builders said in a statement that housing markets are “stabilizing,” but did not say that housing markets were growing. Economists and housing market analysts rely on the Housing Market Index for clues about future housing production. Demand for new homes has been strong for years, but headwinds including tariffs on building materials and labor shortages continued to impact construction rates. More new homes on the market could ease pent-up demand for homes, but rapidly rising home prices are making home ownership less feasible for first-time and moderate-income home-buyers.

Imbalance Between New Homes Built and Consumer Needs

Analysts called out a problematic trend in meeting demands for new homes. Price points are frequently beyond affordable for most buyers, and new housing developments often trend toward larger homes with higher prices. Analysts said that from 2010 to 2017, the average size of new homes increased by 300 square feet while household size decreased over the same period. Lower mortgage rates benefit homebuyers concerned over affordable house payments, but strict mortgage qualification requirements limit the number of potential home buyers that can qualify for mortgage amounts needed to buy homes.

If you are in the market for a new home or interested in refinancing your current property, be sure to contact your trusted home mortgage professional.