Short on funds to pay Uncle Sam on tax day? Well, Freddie Mac said there is a housing shortage of 3.8 MILLION homes which is over and above “normal” demand. With the bump in rates, we do expect inventories to climb a little and appreciation to cool but not start falling. A 3-5% appreciation rate is still appreciation and is a far cry from a drop in prices. Mortgage bonds are trying to hold onto the floor of support they are resting on currently so we are starting this week floating, but not with high levels of confidence. A week and a half ago there were multiple articles from economists talking about the 2.5% yield on the 10 year Treasury being a peak in yield and that we would likely stall and potentially see a drop from that point. That moment was on April 5th. Now, April 18th, the 10 year yield is up to nearly 2.85% and pressing above the resistance of 2.82%. Markets are still in major flux looking for a breather.
**Info provided by Jim Roberts, True North Mortgage
Very Unique subdivision! NW Valley off of 22nd St & Union Hills. Custom builder, RV Garages and NO HOA!
V O L A T I L I T Y. That’s how it is spelled. So the Fed chopped rates by .5% and the markets reacted wildly. Mortgage bonds shot higher yesterday and lenders sat on their hands and did not issue price improvements as they should have. Then bonds open flat to slightly higher and do we get to see a vastly improved rate sheet after yesterday’s bond market rally that saw the 10 year Treasury yield hit the lowest point in HISTORY!!!!!!! Nope, pricing in mortgage land is not better. Why is this? Lenders can provide good rates and fatten margins by not improving pricing when pricing has in fact improved significantly. This is what we are seeing as market indicators would say float because pricing has to be getting better, but that’s the issue, pricing was WAY better Monday morning than it is today. When we are living in the land of the volatile, it is wise to lock what works and call it good because there are too many unseen factors at work. ADP numbers were very solid for February but it will be interesting to watch economic numbers moving forward based on the corona virus hysteria.
Have a great day!
30 Year Fixed 3.375%
15 Year Fixed 3.250%
VA 30 Year Fixed 3.250%
**Rates are subject to change without notice based on market conditions. Rate/APR and terms may vary based on the creditworthiness of the individual.
Information obtained by “True North Mortgage” Jim Roberts and Dan Pareja
It’s slim pickings for buyers in Greater Phoenix these days depending on your budget. Overall supply is 14% lower than last August while contracts in escrow are 15.5% higher! There are a plethora of zip codes considered “frenzies”, where there are literally more properties under contract than there are active for sale; all of them with an average sale price below $400,000. This is unusual for August, which is typically a much softer month. Buyers will have a slightly easier time in more expensive areas such as Central Phoenix, Ahwatukee, South Tempe and the Northeast Valley, but not much unless they’re willing to go further out or increase their budget. Any projections of prices flattening out or coming down in Greater Phoenix this year have been obliterated.
As supply plummets, fewer sellers are deciding to sell. July was THE lowest month for brand new listings going all the way back to the year 2001. That’s significant because the population today is 50% larger and the number of housing units is 63% higher than it was 18 years ago. 19% of all MLS sales and 26% of sales between $100K and $250K sold over asking price last July. Coincidentally (or not), 32% of sales within that same price range still included some form of seller-paid closing cost assistance. Despite the frenzy market, the annual appreciation rate for Greater Phoenix is just 6.4% and sales between $225K-$500K are clocking 3.5-4.0% on average. This may seem surprising given the widening gap between supply and demand; but appraisers remain conservative in their valuations and with at least 80% of buyers needing a loan, they’re riding the brakes on runaway appreciation thus far.
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*****Commentary written by Tina Tamboer, Senior Housing Analyst with The Cromford Report ©2019 Cromford Associates LLC and Tamboer Consulting LLC