U.S. housing recovery strong despite stock market

NEW YORK – Sept. 8, 2015 – A number of U.S. homeowners have been capitalizing on the recent stock market turmoil: For the week ended Aug. 28, mortgage applications ticked up 11.3 percent versus a week earlier, according to the latest Mortgage Bankers Association (MBA) report.

Refinances soared 17 percent to hit their highest level since April.

“You had some borrowers looking to refinance who really took advantage of the short availability of very low rates,” says Mortgage Bankers Association (MBA) Chief Economist Mike Fratantoni. “You had a number of people following the market very closely.”

The stock shake-up triggered by the Chinese economic slowdown resulted in moments of low interest rates on 10-year U.S. Treasury notes – a key benchmark for the mortgage-lending sector. Analysts, though, warn that the surge in home-loan activity tied to a particularly volatile period in the stock market will likely not last, especially with the Federal Reserve preparing to hike interest rates sometime later this year.

Nevertheless, many economists insist that a steadier trend in the housing recovery is underway.

“We do expect that improvement in the housing market to continue,” Fratantoni says. “Job growth and declining unemployment rate and wage growth – those are really the factors that we focus on.”

Source: International Business Times (09/02/15) Dunn, Catherine

© Copyright 2015 INFORMATION, INC. Bethesda, MD (301) 215-4688

Downpayments worry buyers more than mortgage rates

NEW YORK – – A change in downpayment requirements influence a buyer’s willingness to buy more than a change in mortgage rates, according to a new study published by economists at the New York Federal Reserve.

The Fed’s survey of buyers and renters found that the impact of interest rates might be overrated when it’s compared to even small changes in downpayment requirements. Dropping the required downpayment from 20 percent to 5 percent increases the willingness to purchase, on average, by 15 percent among buyers and 40 percent among renters.

On the other hand, decreasing the interest rate on a 30-year fixed-rate mortgage raised the willingness to purchase a home by only 5 percent, on average.

Even if a mortgage rate change will save buyers more money than a lower downpayment, they still prefer the lower downpayment.

“A key takeaway is that the effect of a change in downpayment requirements on housing demand strongly depends on households’ financial situation,” say economists Andreas Fuster and Basit Zafar of the New York Federal Reserve.

“For instance, a loosening of downpayment requirements will have little effect on the willingness to purchase for … current owners with substantial equity, or of renters with substantial liquid savings. The results also imply that … measures such as a loan-to-value (LTV) cap may predominantly affect the lower end of the housing market, and that the effect on house prices will depend on the state of the economy and other asset markets.”

Source: “Down Payments Motivate Buyers More Than Interest Rates,” Real Estate Economy Watch (July 20, 2015)

© Copyright 2015 INFORMATION, INC. Bethesda, MD (301) 215-4688

Average U.S. rate on 30-year mortgage drops to 3.84%

WASHINGTON (AP) – Aug. 28, 2015 – Average long-term U.S. mortgage rates dropped this week to their lowest levels since May, in a week marked by turmoil in global markets that was stoked by economic developments in China.

Mortgage giant Freddie Mac said Thursday the average rate on a 30-year fixed-rate mortgage fell to 3.84 percent from 3.93 percent a week earlier. The benchmark rate hasn’t been that low since May 21.

The rate on 15-year fixed-rate mortgages declined this week to 3.06 percent from 3.15 percent.

The panic selling and extreme gyrations in stock markets sent investors to the safety of U.S. government bonds, raising their prices and dampening their rates. Mortgage rates often track the yield on the 10-year Treasury bond, which dipped below 2 percent on Monday, a day of epic losses and price swings on Wall Street. The yield recovered to 2.18 percent Wednesday. That compared with 2.22 percent last Wednesday.

On Monday, a brief 1,000-point plunge in the Dow Jones industrial average just minutes after stocks opened for trading sent shivers from Wall Street to Main Street. The average ended the day down 3.6 percent. The market staged a robust recovery Wednesday, clocking its best day in nearly four years as the Dow average gained 4 percent.

The recent economic jitters and stomach-churning markets have thrown into question whether the Federal Reserve will raise a key interest rate next month, as has been long anticipated. A rate hike by the Fed could bring higher rates for home loans. The Fed has kept its key short-term rate near zero since the financial crisis year 2008.

Steady U.S. job growth and low mortgage rates have improved home sales this year. Data issued Thursday by the National Association of Realtors showed that slightly more Americans signed contracts to buy homes in July, as pending sales edged up after dipping in June.

To calculate average mortgage rates, Freddie Mac surveys lenders across the country at the beginning of each week. The average doesn’t include extra fees, known as points, which most borrowers must pay to get the lowest rates. One point equals 1 percent of the loan amount.

The average fee for a 30-year mortgage was unchanged from last week at 0.6 point. The fee for a 15-year loan also held steady at 0.6 point.

The average rate on five-year adjustable-rate mortgages fell to 2.90 percent from 2.94 percent; the fee fell to 0.4 percent from 0.5 point. The average rate on one-year ARMs was unchanged at 2.62 percent; the fee held at 0.3 point.

AP Logo Copyright © 2015 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

What is proper etiquette for mobile phone use?

NEW YORK – Sept. 1, 2015 – When is it OK and not OK to use a cellphone in public? A new Pew Research Center survey of more than 3,000 adults sought to identify the good and bad behaviors that people feel is proper mobile etiquette.

In the U.S., 92 percent of adults own a cellphone, and the majority says they never or very rarely turn it off. According to the study’s authors, the cellphone etiquette issue is becoming one that defines modern life.

“This ‘always-on’ reality has disrupted long-standing social norms about when it is appropriate for people to shift their attention away from their physical conversations and interactions with others, towards digital encounters with people and information that are enabled by their mobile phone,” according to the survey.

About 77 percent of adults surveyed say they think it’s generally OK for people to use cellphones while walking down the street, and 75 percent say it’s OK for others to use phones on public transit.

However, only 38 percent say it’s generally OK for others to use cellphones at restaurants – and just 5 percent believe it’s OK to use a cellphone at a meeting, according to the survey.

Eighty-two percent of adults agree that if people use cellphones during group encounters, it frequently or occasionally hurts the conversation. Women are more likely than men to say they feel cellphone use during social gatherings can hamper a group conversation – 41 percent versus 32 percent of men. Also, adults over age 50 are more likely than younger cellphone users to say cellphone use in group conversations can hurt social interactions.

Nevertheless, 89 percent of cellphone owners say they have used their phone during the most recent social gathering they attended. Some say they used their phone to send or read a message, take photos or videos, or take an incoming call.

Why do so many people still use cellphones at social gatherings when they believe it can hamper relationships? For some people, it may be about avoidance and distraction.

About 23 percent of cellphone owners admit using their phone in a public space to avoid interacting with others nearby. Sixteen percent said they used their phone because they were no longer interested in what the group was doing; 15 percent wanted to connect with other people who were strangers to the rest of the group; and 10 percent used their phone so they could avoid participating in the group’s current topic of conversation.

But the survey found that most people use their cellphone in public spaces for information gathering or social reasons rather than anti-social purposes.

Forty-five percent used their phone to post a picture or video they took at the gathering, and 41 percent used their phone to share something that had occurred in the group by text, e-mail or social networking site.

“Many cellphone owners are using their mobile devices while out in public for a variety of reasons, and while their visible actions might seem rude or inconsiderate to an outside observer, in many instances they are using their phone to further their social engagement with others,” according to the Pew Research Center study.

Source: “Americans’ Views on Mobile Etiquette,” Pew Research Center (Aug. 26, 2015)

© Copyright 2015 INFORMATION, INC. Bethesda, MD (301) 215-4688

High luxury market seeks ‘opportunity gateways’

PARSIPPANY-TROY HILLS, N.J. – Sept. 1, 2015 – Ultra-high net worth individuals are increasingly basing their buying decisions upon the opportunities they can gain from owning a luxury residential property, according to a new study by Wealth-X and Sotheby’s International Realty, “UHNW Luxury Real Estate Report: Homes as Opportunity Gateways.”

UHNW – ultra-high net worth individuals – are defined as those with at least $30 million in assets. Driving the “opportunity gateway” trend are international buyers seeking safe investment diversification. They also often engage in home purchases as part of a program to gain citizenship or residency status in foreign nations.

The report finds that there are 211,275 UHNW individuals worldwide, and they collectively hold nearly $3 trillion (U.S. dollars) in real estate assets. About 10 percent of their net worth is devoted to real estate assets, according to the study.

Among the report’s findings

  • 12 percent of second homes purchased by UHNW individuals in emerging countries were located outside of the buyers’ country of residence.
  • Chinese UHNW individuals make up the third largest share of foreign UHNW homeowners in the U.S., behind Canada and the United Kingdom.
  • Twenty nations in Europe and the Americas now offer citizenship or residency programs to individuals willing to invest in domestic residential real estate.

“The research reveals trends that go beyond traditional motivations and help guide real estate investments that contribute to long-term wealth,” says Philip White, president and CEO of Sotheby’s International Realty Affiliates LLC. “It underscores the important role real estate plays in a larger strategy to build a valuable asset portfolio.”

Source: Wealth-X

© Copyright 2015 INFORMATION, INC. Bethesda, MD (301) 215-4688

Bouncing stock market impacts on southwest Fla. real estate

NAPLES, Fla. – Aug. 31, 2015 – The stock market’s recent volatility – which some analysts expect will continue for months – has rattled investors.

Now some real estate experts are wondering whether it will slow Southwest Florida’s fast-track housing market.

Part of the issue, they say, has to do with how investors often react when the stock market has rapid mood swings: When they see their portfolios plunge, they shy away from buying homes because they have less money for purchases and downpayments; but when they see them rebound, they chase after juicy equity returns rather than real estate.

But the effect of seesawing equities on real estate is even more pronounced in Southwest Florida because of the region’s outsized dependence on buyers of second homes or investment properties, according to Daren Blomquist, vice president of Irvine, California-based Realty Trac.

“They can easily curtail purchasing if they get nervous about economy or their portfolio gets lighter,” Blomquist said.

In the Naples-Marco Island area, 49 percent of all single-family homes and condos are vacation homes or investments, Blomquist said – the fourth highest percentage among metro areas with at least 200,000 people. The Cape Coral-Fort Myers area ranked sixth, with 46 percent of all homes in this category.

By comparison, only 34 percent of homes in Florida and 26 percent in the U.S. are not primary residences, he said.

While the percentage of cash buyers has been falling over the past year, Blomquist said, they still are a potent force in the market, and are near their historic averages. And they are a bigger presence in Southwest Florida than they are elsewhere in the state or nation.

RealtyTrac said that in July, the percentage of cash buyers in the Naples metro area was 50.2 percent and 43.9 percent in the Cape Coral metro area. Statewide, 42.7 percent of buyers pay cash, and nationally, only 22.6 percent of buyers.

Naples investment adviser Andrew Hill said while investors have always valued the area’s real estate as a “quality asset,” the stock market’s erratic mood swings over the past week is “like children jacked up on sugar.”

If volatility is prolonged, he said, it could hurt consumer confidence and make some people less likely to buy – particularly since real estate can’t be sold instantly, like stocks and bonds can, and also requires ongoing carrying costs, like insurance, taxes and maintenance.

Naples broker Phil Wood said the big drop in equities early in the week spooked at least two potential buyers of second homes in his brokerage – one canceled a contract, and another backed away from signing one.

While the market rallied later in the week, neither has come back, he said.

If the market continues to swing up and down, he expects more buyer skittishness.

“It’s not always a question of not having enough money to buy, it’s that they prefer not to act until things stabilize,” he said.

Unfortunately, many analysts expect the ups and downs of the past week to continue because of global growth risks, particularly in China. In a video to investors, Dirk Hofschire, senior vice president of Fidelity’s Asset Allocation Research, said he expects “it’s going to be an elevated volatility environment for the foreseeable future.”

But Naples broker Mike Hughes, president of the Naples Area Board of Realtors, said volatility in the stock market might actually help the local housing market in the long run.

“The potential is there for people to cut back on the stock market and buy real estate as a hedge against volatility.

“The perception is that real estate is improving,” he said. “A lot of people knew a correction was coming, so I’m not too concerned right now.”

Hughes pointed to the fact that several homebuilder stocks closed higher on Friday than they did on Monday during the past wiggy week, including the stock of several individual public builders such as WCI Communities, Lennar and D.R. Horton.

The SPDR S&P Homebuilders Exchange-Traded Fund (XHB), which tracks the shares of companies ranging from builders to appliance and flooring makers, also was up slightly for the week.

Hughes expects that global turbulence may eventually encourage more foreign buyers to invest in Southwest Florida as well.

“When you look at where to put money in the world, the U.S. doesn’t look to bad,” he said. “I think once cool heads prevail, people will realize that they need to be invested in America.”

Many financial analysts agree, and point to strong employment and household growth as signs that the U.S. economy is strong. Gross domestic product grew 3.7 percent in the second quarter, according to data released Thursday by the Commerce Department, exceeding the 3.2 percent rise that economists polled by Reuters expected.

And the nation’s housing market continues to show positive signs. In July, housing starts rose to their highest level since October 2007, while the National Association of Home Builder’s measure of builder confidence is at its highest level in nearly a decade. Pending sales of existing homes rose too in July, up 7 percent from a year earlier.

Some in the local real estate industry say the stock market’s wild ride last week needs to be considered in light of the strength of the region’s housing industry since the recession ended.

Glenn Ginsburg, broker and owner of A Delta Realty in Naples, said that while jitters over the stock market “do impact individuals and their thinking,” ultimately the area’s tight supply will continue to keep existing home prices and sales high.

And Kathy Curatolo, executive officer of the Collier Building Industry Association, pointed to the healthy number of new homes sold and permits pulled in the region as signs that real estate remains resilient.

“It’s too early to tell what the effects of volatility will be in three or four months,” she said. “But thus far, we’re still doing well.”

Copyright © 2015 the Naples Daily News (Naples, Fla.), June Fletcher. Distributed by Tribune Content Agency, LLC.

Then and now: Living arrangements in American households

WASHINGTON – Aug. 31, 2015 – The U.S. Census Bureau recently took a hard look at the living arrangements of adults over the past 40-plus years. Its research found that a majority of adults in both 1970 and 2014 shared a household with a spouse.

However, trending data shows that the gap between married adults and unmarried adults sharing households is closing. As of a year ago, spouses sharing a household edged out unmarried adults by just 3.3 percent.

Furthermore, living arrangements in which spouses share households have registered the most significant change in the past 44 years, decreasing almost 20 percent.

A recent Coldwell Banker study showed that 17 percent of non-married respondents bought a home together prior to getting married. Of that, 25 percent belonged to the Generation Y demographic.

Dr. Robi Ludwig, a lifestyle correspondent for Coldwell Banker Real Estate, comments, “What we’re seeing is young couples switching up the order and purchasing their first home regardless of whether or not they have set a wedding date. This is a huge movement within the American culture.”

Source: RISMedia (07/28/15) De Vita, Suzanne

© Copyright 2015 INFORMATION, INC. Bethesda, MD (301) 215-4688

Clients value walkable neighborhoods

WASHINGTON – Aug. 31, 2015 – Walkable mixed-use neighborhoods across the country are growing in popularity, with buyers valuing close access to entertainment areas, public transit and job centers, all without having to rely on a car. A home’s walkability is not only increasingly important to buyers, it’s shown to be a factor in raising home values.

“One of the best sources of evidence of the value of walkability is home values,” MarketWatch reports, “and some new evidence confirms that walkability adds to home values, and also shows that walkable homes have held and increased their value more even in turbulent real estate markets.”

A neighborhood’s walkability is a big draw for potential buyers. In the Community Preference Survey from the National Association of Realtors (NAR), 60 percent of respondents said they preferred to live in a neighborhood with a mix of houses and businesses that are within walking distance.

“While different places appeal to different people, there’s a growing awareness that walkable neighborhoods with a wide mix of uses provide communities a trump card as they strive to compete in a 21st century economy,” says Brad Broberg in the latest issue of On Common Ground. “Neighborhoods where people can live close to work, get their groceries and grab a beer – all without needing a car – are the magnets that attract many of today’s young professionals. Where they go, jobs follow.”

Indeed, City Observatory recently reported that between 2007-2011, the city centers of the largest metro areas, traditionally places with high walkability and mixed-use neighborhoods, experienced stronger job growth than remote areas for the first time in decades.

Recent data shows that mixed-use transit oriented neighborhoods improve property values. A 2009 study by CEOs for Cities found that in 13 of the 15 markets analyzed, increased walkability in a neighborhood was directly linked to higher home values.

Developers across the country are changing their projects to reflect this growing shift towards walkability and the changing lifestyle preferences of buyers.

Source: “What Homebuyers Want Now: Walkable Neighborhoods,” MoneyWatch (July 16, 2015), “Creating Walkable Towns,” On Common Ground, (June 10, 2015), “No Parking, No Problem” REALTOR® Magazine, (March, 2015)

© Copyright 2015 INFORMATION, INC. Bethesda, MD (301) 215-4688