If you’re planning to buy a home, an inspection is an important step in the process. It assesses the condition of the home before you finalize the transaction. It’s also a different step in the process from an appraisal, which is a professional evaluation of the market value of the home you’d like to buy. In most cases, an appraisal is ordered by the lender to confirm or verify the value of the home prior to lending a buyer money for the purchase. Here’s the breakdown of each one and why they’re both important when buying a home. Home Inspection Here’s the key difference between an inspection and an appraisal. Bankrate says: “In short, while an appraisal helps you understand a home’s value, inspections help you understand a home’s condition.” The home inspection is a way to determine the current state, safety, and condition of the home before you finalize the sale. If anything is questionable in the inspection process – like the age of the roof, the state of the HVAC system, or just about anything else – you as a buyer have the option to discuss and negotiate any potential issues or repairs with the seller before the transaction is final. Your real estate agent is a key expert to help you through this part of the process. Home Appraisal The National Association of Realtors (NAR) explains: “A home purchase is typically the largest investment someone will make. Protect yourself by getting your investment appraised! An appraiser will observe the property, analyze the data, and report their findings to their client. For the typical home purchase transaction, the lender usually orders the appraisal to assist in the lender’s decision to provide funds for a mortgage.” When you apply for a mortgage, an unbiased appraisal (which is required by the lender) is the best way to confirm the value of the home based on the sale price. Regardless of what you’re willing to pay for a house, if you’ll be using a mortgage to fund your purchase, the appraisal will help make sure the bank doesn’t loan you more than what the home is worth. This is especially critical in today’s sellers’ market where low inventory is driving an increase in bidding wars, which can push home prices upward. When sellers are in a strong position like this, they tend to believe they can set whatever price they want for their house under the assumption that competing buyers will be willing to pay more. However, the lender will only allow the buyer to borrow based on the value of the home. This is what helps keep home prices in check. If there’s ever any confusion or discrepancy between the appraisal and the sale price, your trusted real estate professional will help you navigate any additional negotiations in the buying process. Bottom Line The inspection and the appraisal are critical steps when buying a home, and you don’t need to manage them by yourself. Let’s connect today so you have the expert guidance you need to navigate the entire homebuying process.

30YR Fixed 6.57% -0.02% 15YR Fixed 5.99% -0.01%   Calmer Markets; Are Home Prices Already Done Falling? The bond market moved far less over the entire week than it did during a single day last week. Not only was volatility much lighter, but the trading patterns changed as well. At the onset of the recent panic in the banking sector, stocks and bonds shifted into risk aversion mode.  Scary news pushed money out of stocks and into bonds.  Promising developments did the opposite.  This results in stock prices and bond yields moving with a high degree of correlation (because bond yields move lower when bonds increase in value). Incidentally, there's your "big day" on March 22nd, when 10yr yields traversed a range between 3.64 and 3.43.  Fast forward to the current week (where 10yr yields spent most of their time between 3.54 and 3.58) and there are no signs of that type of correlation.   There is largely due to the market finally beginning to calm down and move on from the hypervigilant assessment of banking sector risks.  To be clear, this doesn't mean those concerns are gone, simply that this week didn't see the same sort of volatility or deterioration in banking sector sentiment.  The following chart shows the percent change in regional bank stocks compared to the S&P.  It shows the broader stock market beginning to heal as soon as bank stocks stopped plummeting.   If bank drama continues to fade, the market will increasingly focus on the economic implications, not only of a more cautious banking sector, but also of the high interest rates that are already in place.  Those forces combined should put downward pressure on inflation--something that is already showing up in the data, as seen in this week's release of the PCE Price Index falling a tenth of a percent at the "core" level (i.e. excluding food and energy).  Along with its more timely counterpart, CPI, both of the two main inflation indices are telling a similar story. This week's other economic data may not have had an impact on the market, but it's nonetheless relevant to the housing outlook.  Pending Home Sales numbers are still historically low, but have risen on each of the past 3 months.  That's a big victory for this week's report (which covered the month of February) due to the fast jump in rates seen last month. Weekly purchase applications, as reported by the Mortgage Bankers Association, confirm that buyers are paying attention to rates.  The rate recovery in March has coincided with a recovery in purchase apps. But the most notable and most confusing housing data released this week would be the duo of major home price indices from the FHFA and S&P Case Shiller.  Both indices show prices in apparent freefall when examined in year-over-year terms. Month-over-month numbers tell a different story.  In fact, the broader FHFA index actually moved back into positive territory in January.  Case Shiller was down 0.4% but at least that's a slower pace of losses compared to the previous month.  And both are well above their moments of steepest declines seen late last year. Does this mean home prices are done falling?  Yes, actually, if you ask FHFA and base the answer on the current data.  A big spike in rates or an unexpected economic shock could change the outlook.  All we can truly conclude from the current data is that prices are showing a good level of resilience at this stage whereas such resilience was nowhere to be found the last time monthly home prices surged into negative territory.  On a side note, keep in mind that the year-over-year indices may soon turn negative even if prices don't lose any more ground.  Reason being: the price index peaked in May/June of last year and leveled off at slightly lower levels shortly thereafter. Prices would need to move up by roughly half a percent by May to avoid turning negative.  Even if prices flat-lined here and didn't move higher, here's what that would look like on a chart.  

30YR Fixed 6.59% -0.02% 15YR Fixed 6.00% -0.02%   Failing Banks, Falling Rates, Falling Prices. Should You Worry? While there were no further bank failures this week, there was plenty of concern and speculation about who might be next. Those concerns teamed up with Wednesday's Fed announcement to push interest rates lower (yes, even though the Fed hiked rates). Meanwhile, two separate reports showed a decline in home prices. Bank Failures Driving Markets Since the failure of Silicon Valley Bank earlier this month, financial markets drastically shifted their trading patterns.  Up until that point, the default reaction was for stocks and bonds to win and lose together depending on the implications for Fed policy.   Specifically, if economic data came out that made the market think the Fed would be friendlier, stocks and bonds would improve together (note: an improvement in bonds results in lower yields/rates).  If something looked like it would make the Fed cranky, both lost together.  It made for an interesting mirror image effect on charts. In the chart above, you may notice that the mirror image pattern starts getting less obvious over the past few weeks.  If we zoom into a more granular view, we can see that pattern has shifted to one that's more purely correlated--especially this week. What's up with this? The simple answer is that fears about the banking sector drive what's known as a "flight to safety."  This involves the selling of riskier assets like stocks and the purchase of safer havens like bonds.  These ebbs and flows have followed the various bank contagion headlines as well as the Fed's comments on that topic on Wednesday the 22nd. Wednesday's Fed Announcement The Fed was widely expected to hike rates by 0.25% in spite of the banking drama.  As such, the hike itself had little-to-no impact on markets.  Instead, traders focused on Fed Chair Powell's willingness to entertain additional risks posed by stress in the banking sector.  He likened the uncertainty to a "free rate hike" in that it has the effect of tightening financial conditions without the Fed needing to hike rates again.  Many market participants saw this as paving the way for the Fed to be less aggressive with rate hikes going forward. That said, Fed members can't really change their forecasts to speculate about more bank failures.  Markets would read those forecasts as an endorsement of additional panic, thus making rate cuts a self-fulfilling prophecy.  Instead, the Fed's outlook for its own policy rate remains around 5% all the way through 2024.  Meanwhile, financial markets are already betting on roughly a full point of rate cuts by the end of 2023 (3.9% according to markets vs the current Fed Funds Rate just under 4.9%). Here's another way to look at the market's view vs the view presented in the Fed's forecasts (also known as the "dot plot" because the Fed publishes said plot in its forecast materials 4 times a year).  The red line shows market expectations while the purple line conveys the median view among Fed members. Mortgage rates tend to track fairly well with 10yr Treasury yields and this week was no exception.  Both pushed into their lowest levels since Early February.  From here, rates can lurch lower abruptly and infrequently in the event of additional bank failures or significant spikes in contagion fears.  Rates can move higher as well, but such a move would likely be more gradual considering traders will only take their guard down slowly as days go by without additional bank failures. Banking issues aside, there's an economy and inflation to worry about.  If banks fade to the background, rates will once again be most readily influenced by inflation and the economic activity that shapes it. What's Up With Home Prices? If rates are looking for signs of lower inflation, one might argue they'd see it in the housing market.  While this unfortunately isn't the way that housing inflation is measured, two reports on home sales showed an ongoing drop in home price inflation this week.  The data made headlines because both New and Existing Home Sales showed prices turning negative in year over year terms. First off, let's address whether this is just the beginning of another housing crisis or anything remotely like it.  No it's not.  The most recent spike in prices happened for vastly different reasons and the underlying financial conditions of the mortgage market are infinitely more sound.  Perhaps most importantly of all, there simply is not a glut of new or existing home supply as there was back then--a point that we've brought up multiple times in the past few months. Home prices were badly in need of a correction and this is that correction.  It could get a bit deeper or it could stabilize.  The details depend on geography and the broader economy.  Either way, when we look at a chart of outright prices (the same prices that account for the green line in the chart above), we're left with a slightly different impression: Did your mind's eye see it? If not, here's the "different impression" implied above: Current prices are still very high relative to the exceptionally stable trend in the decade before covid.  Combine that with elevated rates and affordability is a major challenge.  That would continue to be the case if prices remain "too high."  On the other hand, we wouldn't want prices to quickly swing into "too cold" territory, because that would indicate a problem in housing or the economy, and it could cause prospective buyers to wait for prices to fall farther. And just in case these charts make you wonder if you should wait for prices to fall, please note that home prices are seasonal and February already moved higher versus January--it just did so at a slower pace than last year. What's Next? The banking issues have led the market to shift gears away from a steady trend toward higher rates.  The new environment is more neutral as markets wait to see how the banking situation plays out at home and abroad.  Traders will also wait for the more relevant economic data in April (primarily the big jobs report and the Consumer Price Index).  There are good cases to be made for both camps, but even the Fed can't deny that the case for higher rates looks a lot shakier than it did a few weeks ago.

30YR Fixed 6.61% +0.01% 15YR Fixed 6.02% +0.02%   Pending Home Sales Adding to Resilient Housing Narrative January was a refreshingly strong month for many economic reports, but especially for metrics relating to the housing and mortgage markets.  This wasn't too hard to reconcile with December and January having much lower mortgage rates, on average than October and November.   There's also a point at which housing market has sustained enough damage that buyers start seeing more value.  This sentiment has also been in play depending on the market in question.  In other words, prices and sales had lost enough ground that prospective buyers were seeing more value.  Lower rates only compound the effect. The concern was that February's sharply higher rates might push back in the other direction.  There was already some evidence for this based on the noticeable decline in purchase applications reported in the MBA's weekly numbers. Today's release of February's Pending Home Sales figures from the National Association of Realtors adds to the case for resilience in the housing market.  Despite the rising rates in February and a forecast calling for a drop of more than 2%, Pending Sales managed to increase by 0.8%.   No one would confuse the outright level of sales with being strong.  In fact, the index continues to operate near record lows.  But the point is that we're seeing resilience in yet another report despite expectations for a poorer showing.  Long journeys and single steps, etc...

Spring has arrived, and that means more and more people are getting their homes ready to sell. But with recent shifts in real estate, this year’s spring housing market will be different from the frenzy of the past several years. To sell your house quickly, without hassles, and for the most money, be sure to follow these four simple tips: 1. Make Sure You Give Buyers Access One of the biggest mistakes you can make as a seller is limiting the days and times when buyers have access to view your home. In any market, if you want to maximize the sale of your house, you can’t limit potential buyers’ access to view it. If it’s not accessible, it could cost you by sitting on the market longer and ultimately selling for a lower price. 2. Make Your Home Look as Good as Possible on the Inside For anything to sell, especially your home, it must look inviting. Your real estate agent can give you expert advice on ideal staging for your home. Even updating a room with fresh paint, steam cleaning carpets, or removing clutter from the garage can make a big impact. 3. First Impressions Matter The old saying “you never get a second chance to make a first impression” matters when selling your house. Often, the first impression a buyer gets is what they see as they walk up to the front door. Putting in the work in on the exterior of your home is just as important as what you stage inside. Freshen up your landscaping to improve your home’s curb appeal so you can make an impact with potential buyers. 4. Price It Right This is probably the most important aspect of selling your home in today’s real estate market. If a house is priced competitively, it’s going to sell. Period. To do this, you have to know what’s happening with home prices in your area and understand the factors that are affecting the market right now. That’s why it’s best to work with a trusted real estate professional who can ensure you list your house at the right price. Bottom Line Everyone selling their home wants three things: to sell it for the most money they can, to do it in a certain amount of time, and to do all of that with the fewest hassles. To accomplish these goals, let’s connect so you can understand the steps you need to take to sell your home this spring. 

If you’re thinking about selling this spring, it’s time to get moving – the best week to list your house is fast approaching. Experts at realtor.com looked at seasonal trends from recent years (excluding 2020 as an uncharacteristic year due to the onset of the pandemic) and determined the ideal week to list a house this year: “Home sellers on the fence waiting for that perfect moment to sell should start preparations, because the best time to list a home in 2023 is approaching quickly. The week of April 16-22 is expected to have the ideal balance of housing market conditions that favor home sellers, more so than any other week in the year.” If you’ve been waiting for the best time to sell, this is your chance. But remember, before you put your house on the market, you’ve got to get it ready. And if you haven’t started that process yet, you’ll need to move quickly. Here’s what you should keep in mind. Work with an Agent To Determine Which Updates To Make Start by prioritizing which updates you’ll make. In February, realtor.com asked more than 1,200 recent or potential home sellers what updates they ended up making to their house before listing it (see graph below):   As you can see, the most common answers included landscaping and painting. Work with a trusted real estate agent to determine what projects make the most sense for your goals and local market. If Possible, Plan To Have Your House Staged Once you’ve made any necessary repairs and updates to your house, consider having it staged. According to the National Association of Realtors (NAR), 82% of buyers’ agents said staging a home made it easier for a buyer to visualize the property as a future home. Additionally, almost half of buyers’ agents said home staging had an effect on most buyers’ view of the home in general. Homes that are staged typically sell faster and for a higher price because they help potential buyers more easily picture their new life in the house. Bottom Line Are you ready to sell this spring? Let’s connect to plan your next steps. You can start by making a checklist of what you think your house needs to get ready. Then, we can work together to prioritize your list and move forward together.

30YR Fixed 6.44% -0.01% 15YR Fixed 5.93% -0.02%   New Home Sales Rose Slightly After Revisions Erased January's Surge New home sales surprised everyone in January, surging by 7.5 percent to 670,000 units, the highest rate since March 2022.  It was, however, only an illusion. That number has now been revised down to 633,000.  The more modest number – which is still significantly higher than analysts had expected – means that the February number, a seasonally adjusted annual sales rate of 640,000 units, represents a monthly increase of 1.1 percent. This is down 19 percent from the 790,00-unit rate in February 2022. The February number wasn’t a surprise. Even before the January revision, analysts had expected a pullback. Those polled by Econoday had a consensus estimate of 645,000 and Trading Economics came in at 650,000. On a non-adjusted basis, there were 59,000 homes sold in February, up from 55,000 in January. This brought the year-to-date numbers to 114,000 versus 141,000 units, respectively. At the end of February, there were an estimated 436,000 new homes available for sale. This is estimated to be an 8.2-month supply at the current sales pace. An estimated 75,000 of those homes are ready for occupancy. The median sales price of a home sold last month was $438,000 and the average was $498,700. A year earlier the respective prices were $427,400 and $522,200. Sales in the Northeast were down 40.0 percent from January and 55.3 percent from a year earlier. In the Midwest, the monthly decrease was 1.4 percent for an annual decline of 20.2 percent. Sales rose in both the South and West in February, growing by 3.0 percent and 8.1 percent, but were still lower year-over-year by 33.2 and 10.1 percent, respectively.

Are you having trouble finding a home that fits your needs and your budget? If so, you should know there’s an option worth considering – condominiums, also known as condos. According to Bankrate: “A condo can be a more affordable entry point to homeownership than a single-family home. And as a homeowner, you’ll build equity over time and have access to tax benefits that a renter wouldn’t.” That’s why expanding your search to include additional housing types, like condominiums, could help you accomplish your homeownership goals this spring, especially if you can be flexible about the space you need. Condos are typically smaller than a single-family home, but that’s part of what can make them more budget-friendly (see graph below): In addition to providing more options in your home search and possibly your price point, there are several other benefits to condo living. They tend to require less upkeep and lower maintenance – and that can give you more time to spend doing the things you enjoy. Plus, since many condos are in or near city centers, they offer the added benefit of being in close proximity to work and leisure. Remember, your first home doesn’t have to be your forever home. The important thing is to get your foot in the door as a homeowner so you can start building wealth in the form of home equity. In time, the equity you develop can fuel a future purchase if your needs change. Ultimately, owning and living in a condo can be a lifestyle choice. And if that appeals to you, they could provide the added options you need in today’s market. Bottom Line It could make a lot of sense to add condos to your home search. Let’s connect today if you’re ready to check out the options in our area.

30YR Fixed 6.70% -0.05% 15YR Fixed 6.12% -0.05%   Mortgage Application Volume Inches Higher as Rates Find Their Footing A second week of declining interest rates prompted another increase in mortgage activity last week, the third in as many weeks. The Mortgage Bankers Association (MBA) said its Market Composite Index, a measure of mortgage loan application volume, gained 3.0 percent on both a seasonally adjusted and unadjusted basis.  The Refinance Index was 5 percent higher than the week ended March 10 but was down by 68 percent from the same week in 2022. Refinancing accounted for 28.6 percent of applications, up from 28.2 percent a week earlier.  View Refinance Applications Chart The seasonally adjusted Purchase Index increased 2 percent from one week earlier and was up 3 percent on an unadjusted basis. Purchase activity is 36 percent lower year-over-year.  View Purchase Applications Chart "Treasury yields declined last week, driven by uncertainty over the health of the banking sector and worries about the broader impact on the economy. Mortgage rates declined for the second week in a row, with the 30-year fixed rate dropping to 6.48 percent, the lowest level in a month,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “However, mortgage rates have not dropped as much as Treasury rates due to increased MBS market volatility. The spread between the 30-year fixed and 10-year Treasury remained wide at around 300 basis points, compared to a more typical spread of 180 basis points.” Other Highlights from MBA’s Weekly Mortgage Applications Survey Loan sizes increased for all mortgages, rising from $382,000 to $389,000. The average for purchase loans increased by $7,100 to $437,700. The FHA share of total applications decreased to 12.3 percent from 12.9 percent and the VA share of total applications dipped to 11.7 percent from 11.9 percent. The USDA share was unchanged at 0.5 percent. The 6.48 percent rate for conforming 30-year fixed-rate mortgages (FRM) was 23 basis points lower than the prior week’s average. Points decreased to 0.66 from 0.79. The rate for jumbo 30-year FRM decreased to 6.30 percent from 6.39 percent, with points lowering to 0.55 from 0.61. FHA-backed 30-year FRM rates averaged 6.32 percent with 1.07 points. The prior week the averages were 6.58 percent and 1.20 points. The average contract rate for 15-year FRM declined to 6.02 percent from 6.14 percent, with points decreasing to 0.60 from 0.77.   The 5/1 adjustable-rate mortgage (ARM) rate dropped 11 basis points to 5.58 percent and points to 0.75 from 0.87. ARM applications were only negligibly higher than the prior week with an 8.6 percent share.  

  February contract closings surged 14.5% to 4.58 million rate Annual decline in median sales price was first since 2012 US sales of previously owned homes rose in February by the most since mid-2020, snapping a record year-long slide tied to rising interest rates and affordability constraints. Contract closings increased 14.5% last month to an annualized pace of 4.58 million, according to data released Tuesday by the National Association of Realtors. Both the monthly advance and rate of sales exceeded the highest forecasts in a Bloomberg survey of economists. “Conscious of changing mortgage rates, home buyers are taking advantage of any rate declines,” Lawrence Yun, NAR’s chief economist, said in a statement. “Moreover, we’re seeing stronger sales gains in areas where home prices are decreasing and the local economies are adding jobs.”       While mortgage rates are down from their peak, and may ease further as banking turmoil drives Treasury yields lower, the market for previously owned homes may continue to struggle because of a lack of inventory. Many homeowners have lower-rate mortgages, offering them little incentive to relocate. The number of homes for sale held at 980,000 in the month. It would take 2.6 months to sell all the homes on the market. Realtors see anything below five months of supply as indicative of a tight market.  The pace of sales in February was the strongest in five months. Despite the increase, residential real estate remains depressed against the backdrop of the Federal Reserve’s aggressive policy tightening campaign that sent mortgage rates soaring last year and sidelined many prospective buyers.     Lending Standards The recent troubles in the banking sector also risk prompting lenders to tighten loan standards that could thwart any momentum in residential real estate. The median selling price of a previously owned home fell 0.2% from a year earlier to $363,000 in February, according to NAR. The decline was the first in 11 years, ending a record string of annual gains. Some 57% of homes sold were on the market for less than a month. Properties remained on the market for 34 days on average in February, nearly twice as long as a year earlier. Existing-home sales account for about 90% of US housing and are calculated when a contract closes. Data on new-home sales, which make up the remainder, are based on contract signings, will be released Thursday. Digging Deeper Sales strengthened in all regions, led by double-digit increases in the West, South and Midwest The median selling price in the West dropped 5.6% from a year ago and may have helped bolster demand, Yun said First-time buyers made up a historically low 27% of purchases in February, down 4 percentage points from a month earlier Cash sales represented 28% of total sales. Investors, who often purchase with cash and are therefore less sensitive to mortgage rates, made up 18% of the market Sales of single-family homes increased 15.3% to an annualized 4.14 million, the highest since September. Existing condominium and co-op sales also rose from a month earlier  

  YouTube TV is raising prices for the first time in three years. Effective Thursday, the streaming service will charge $72.99 instead of $64.99 per month for new subscribers. Existing subscribers will see the increase beginning with the first bill on or after April 18. The 12% hike is a significant increase but also a sign of the direction the rest of the streaming industry is headed. In the last six months, Sling TV, Fubo TV, DirecTV Stream, and the Hulu Live TV bundle each have raised prices between $5 and $10. The last time YouTube TV raised its price was in June 2020. While there have been carriage fights and other issues during that timespan, it’s still a long period of stability. Hulu, by contrast, has had several price increases in the same time span. “We are committed to offering a premium way for you to stream TV, but understand this new price may not work for you,” the company tweeted, regarding the announcement. They also revealed the service’s 4K Plus add-on will drop by $10. All of this comes on the heels of YouTube TV signing a massive deal with NFL Sunday Ticket. The price for the out-of-market games add-on has not yet been announced. For those who want to switch streaming services in light of YouTube TV’s decision, the most comparable competitors are Fubo TV, DirecTV Stream and Hulu Live TV. Sling TV and Philo are significantly cheaper but offer far fewer channels.      

Though the housing market is no longer experiencing the frenzy of a year ago, buyers are showing their interest in purchasing a home. According to U.S. News: “Housing markets have cooled slightly, but demand hasn’t disappeared, and in many places remains strong largely due to the shortage of homes on the market.” That activity can be seen in the latest ShowingTime Showing Index, which is a measure of buyers actively touring available homes (see graph below): The 62% jump in showings from December to January is one of the largest on record. There were also more showings in January than in any other month since last May. As you can see in the graph, it’s normal for showings to increase early in the year, but the jump this January was larger than usual, and a lot of that has to do with mortgage rates. Michael Lane, VP of Sales and Industry at ShowingTime+, explains: “It’s typical to see a seasonal increase in home showings in January as buyers get ready for the spring market, but a larger increase than any January before after last year’s rapid cooldown is significant. Mortgage rate activity this spring will play a big role in sales activity, but January’s home showings are a positive sign that buyers are getting back out there . . .” It's important to note that mortgage rates hovered in the low 6% range in January, which played a role in the high number of showings. What does this mean? When mortgage rates eased, buyer interest climbed. The jump in home showings early this year makes one thing clear – while rates may be volatile right now, there are interested buyers out there, and when mortgage rates are favorable, they’re ready to make their move. 

30YR Fixed 6.54% -0.01% 15YR Fixed 5.98% -0.02%   Construction Stats Improve, Multifamily Plays Leading Role It didn’t approach the levels of the “good old days” of 2020 and 2021, but construction activity did show signs of life last month. The U.S. Census Bureau and the Department of Housing and Urban Development reported that both housing permit activity and residential construction starts rose sharply in February after a fairly lackluster performance in January. As in January, however, credit was largely due to multifamily construction. Permits for residential housing units were issued at a seasonally adjusted annual rate of 1.524 million units in February compared to 1.339 million in January. This was an increase of 13.8 percent. The figure, however, remains 17.9 percent lower than the February 2022 rate of 1.857 million units. The rate of permitting for single-family houses rose 7.6 percent to 777,000 units while multifamily permits were 24.3 percent higher at 560,000 units. Single-family permits were down 35.5 percent year-over-year, but the multifamily rate gained 16.9 percent on an annual basis. Prior to adjustment, the report puts the number of permits issued in February at 109,500 of which 58,200 were for single-family houses. The respective January numbers were 101,000 and 53,100. Permitting rose in three of the four major regions in February. The Midwest’s rate increased 9.6 percent, the South’s rose 10.9 percent, and permitting shot up 30 percent in the West. The Northeast was the outlier with a 2.8 percent decline. All regions performed well below their February 2022 levels, with deficits ranging from 11.4 percent in the South to 42.5 percent in the Northeast. Housing starts increased by 9.8 percent compared to January. The seasonally adjusted rate rose from 1.321 million units, revised from the original estimate of 1.309 million to 1.450 million. This was 18.4 percent lower than starts the prior February. Again, the month-over-month gains came principally from the multifamily sector. Those starts jumped 24.1 percent while single-family starts only edged up by 1.1 percent to annual rates of 608,000 and 830,000 respectively. Single-family starts were down 31.6 percent from February 2022 while multifamily starts grew 14.3 percent. Robert Dietz, chief economist for the National Association of Home Builders, called February’s single-family production rate “anemic.” He said builders are continuing to wrestle with elevated mortgage rates, high construction costs and tightening credit conditions that threaten to be exacerbated by recent turmoil in the banking system. On an unadjusted basis, housing starts totaled 104,900 compared to 96,800 in January, and those for single-family houses rose to 58,600 from 57,900. In February 2022 there were 126,100 residential construction starts. The Northeast was also the only region where starts declined, falling 16.5 percent from the prior month. Starts shot up 70.3 percent in the Midwest and were up 2.2 percent and 16.8 percent in the South and the West. Annual decreases ranged from 14.1 percent in the Midwest to 20.3 percent in the South. Both permits and starts were much higher than projected. Econoday analysts had a consensus forecast of 1.340 million permits and 1.315 million for housing starts. The rate of unit completions rose 12.2 percent in February to an annual rate of 1.557 million. During the first two months of the year, there have been 205,200 housing units completed, 147,600 of them single-family homes. At the end of the reporting period, there were 294,000 permits issued under which construction had not started, virtually unchanged from the prior month while the backlog of single-family permits declined by 3.0 percent to 130,000. In addition, an estimated 1.691 million units were under construction including 734,000 single-family units.   Dietz points out that, “Given the declining pace for single-family starts in 2022, more homes are being completed than starting construction. In February, 58,600 single-family homes started construction. However, 77,100 completed construction.” For the year-to-date, there have been 116,500 single-family starts and 147,600 units brought online. This difference is responsible for the ongoing decline in the number of single-family units under construction, as displayed in the chart below.

  Though there are more homes for sale now than there were at this time last year, there’s still an undersupply with fewer houses available than in more normal, pre-pandemic years. The Monthly Housing Market Trends Report from realtor.com puts it this way:  “While the number of homes for sale is increasing, it is still 43.2% lower than it was before the pandemic in 2017 to 2019. This means that there are still fewer homes available to buy on a typical day than there were a few years ago.” The current housing shortage has an impact on how you search for a home this spring. With limited options on the market, buyers who consider what’s a necessity versus what’s a nice-to-have will be more successful in their home search. The first step? Get pre-approved for a mortgage. Pre-approval helps you better understand what you can borrow for your home loan, and that plays an important role in how you’ll put your list together. After all, you don’t want to fall in love with a home that’s out of reach. Once you have a good grasp on your budget, the best way to prioritize all the features you want and need in a home is to put together a list. Here’s a great way to think about them before you begin: Must-Haves – If a house doesn’t have these features, it won’t work for you and your lifestyle. Nice-To-Haves – These are features you’d love to have but can live without. Nice-to-haves aren’t dealbreakers, but if you find a home that hits all the must-haves and some of the these, it’s a contender. Dream State – This is where you can really think big. Again, these aren’t features you’ll need, but if you find a home in your budget that has all the must-haves, most of the nice-to-haves, and any of these, it’s a clear winner. Finally, once you’ve created your list and categorized it in a way that works for you, discuss it with your real estate agent. They’ll be able to help you refine the list further, coach you through the best ways to stick to it and find a home in your area that meets your needs.

30YR Fixed 6.75% +0.18% 15YR Fixed 6.22% +0.22%   Harder for Borrowers to Secure a Loan in February, Credit Availability Hits Multi-Year Lows Mortgage credit availability fell to just short of its 2012 benchmark level in February. The Mortgage Bankers Association (MBA) said its Mortgage Credit Availability Index (MCAI) dropped 3.0 percent from its January level to a reading of 100.1. A decline in the MCAI indicates that lending standards are tightening, while increases in the index are indicative of loosening credit. The index was benchmarked to 100 in March 2012. “Mortgage credit availability decreased to its lowest level since January 2013 with all loan types seeing declines in availability over the month,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “The conforming subindex decreased 4.3 percent to its lowest level in the survey, which goes back to 2011. This decline was driven by the ongoing trend of shrinking industry capacity as mortgage rates stayed significantly higher than a year ago. Additionally, in this volatile rate environment and potentially weakening economy, there was also a reduction in refinance programs offered for low credit score and high-LTV borrowers.”  The MCAI has four component indices. The Conventional MCAI decreased 4.4 percent, while the Government MCAI was down 1.6 percent. The two component indices of the Conventional MCAI fell sharply, the decline in the Conforming MCAI noted by Kan and a 4.4 percent drop in the Jumbo index. The MCAI and its components are calculated using several factors related to borrower eligibility (credit score, loan type, loan-to-value ratio, etc.). These metrics and underwriting criteria for over 95 lenders/investors are combined by MBA using data made available via a proprietary product from ICE Mortgage Technology. The resulting calculations are summary measures which indicate the availability of mortgage credit at a point in time. All indices were benchmarked on March 31, 2012.    

One of the benefits of being a homeowner is that you build equity over time. By selling your house, that equity can be used toward purchasing your next home. But before you can put it to use, you should understand exactly what equity is and how it grows. Bankrate explains it like this: “Home equity is the portion of your home you’ve paid off – in other words, your stake in the property as opposed to the lender’s. In practical terms, home equity is the appraised value of your home minus any outstanding mortgage and loan balances.” Majority of Americans Have a Large Amount of Equity If you’ve owned your home for a while, you’ve likely built up some equity – and you may not even realize how much. Based on data from the U.S. Census Bureau and ATTOM, the majority of Americans have a substantial amount of equity right now (see graph below): And having such large amounts of equity is a benefit to homeowners in more ways than one. Rick Sharga, Executive Vice President of Market Intelligence at ATTOM, explains: “Record levels of home equity provide security for millions of families, and minimize the chance of another housing market crash like the one we saw in 2008.” Over time, your home equity grows. In addition to providing financial stability while you own your house, when you’re ready to sell it, that money could go a long way toward paying for your next home. Bottom Line By selling your house and leveraging your equity, it can be easier to pay for your next home. Let’s connect today so you can find out how much home equity you have and start planning your next move.

30YR Fixed 7.00% -0.05% 15YR Fixed 6.45% -0.05%   Mortgage Application Volume Up Slightly, Despite Higher Rates Mortgage applications activity increased for the first time in three weeks during the period ending March 3, despite the slight increase in rate.  The degree of that change is a little muddied by revisions to nearly two months of data from earlier in the year. Those revisions are explained at the end of this report.  The Mortgage Bankers Association (MBA) said its Market Composite Index, a measure of mortgage loan application volume, increased 7.4 percent on a seasonally adjusted basis compared to the previous week. On an unadjusted basis, the Index was up 9 percent. The Refinance Index rose 9 percent from the previous week and was 76 percent lower than the same week in 2022.  The refinance share of mortgage activity increased to 28.9 percent of total applications from 28.7 percent. The Purchase Index was 7 percent higher than the prior week on a seasonally adjusted basis and up 9 percent before adjustment. Purchase volume has declined 42 percent on an annual basis. “Mortgage rates continued to increase last week. The 30-year fixed rate rose to 6.79 percent – the highest level since November 2022 and 270 basis points higher than a year ago,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “Even with higher rates, there was an uptick in applications last week, but this was in comparison to two weeks of declines to very low levels, including a holiday week. Comparing the application indices from a year ago, purchase applications were still down 42 percent, and refinance activity was down 76 percent. Many borrowers are waiting on the sidelines for rates to come back down.” Other Highlights from MBA’s Weekly Mortgage Applications Survey The average loan size increased from $376,100 to $379,200 while the size of a purchase loan declined from $428,400 to $425,700. The FHA share of applications increased to 12.8 percent from 12.0 percent and the VA share rose to 2.0 percent from 11.6 percent . The USDA share was unchanged at 0.5 percent from the week prior.   The 6.79 percent average contract interest rate for conforming 30-year fixed-rate mortgages (FRM) was 8 basis points higher than the prior week. Points moved to 0.80 from 0.77. Jumbo 30-year FRM had a rate of 6.49 percent with 0.59 point. The prior week the average was 6.44 percent with 0.49 point. Thirty-year FRM with FHA backing saw an 11 basis point increase in its average rate, to 6.56 percent. Points rose to 1.21 from 1.19. The rate for 15-year FRM averaged 6.25 percent, up from 6.13 percent the prior week. Points increased to 1.01 from 0.93. The 5/1 adjustable-rate mortgage (ARM) increased an average of 2 basis points to 5.75 percent. Points averaged 0.95, up from 0.86 the previous week. The ARM share of activity increased from 8.1 percent the previous to 8.6 percent of total applications. MBA said it had received revised data from one of its survey participants covering a seven week period (January 13 through February 24, 2023) The volume changes reported above are compared to the results as reflected in the revised report from the week ending February 24. The prior data showed lower purchase and higher refinance application volume than the revised data. The non- seasonally adjusted market index shows only small changes in some of the seven weeks while the unadjusted purchase index is higher across all weeks after the revisions. Despite the revisions, the seasonally adjusted purchase index was still at a 28-year low for the during the week ended February 24. The unadjusted refinance index is lower across all weeks post-revision compared to pre-revision. Interest rates were largely unaffected by the changes.    

Are you planning to buy a home this spring? Though things are more balanced than they were at the height of the pandemic, it’s still a sellers’ market. So, when you find the home you want to buy, remember these four tips to make your best offer. 1.Lean on a Real Estate Professional Rely on an agent who can support your goals. As Bankrate notes: “. . . select the best real estate agent for your needs. They will be a critical part of your home buying process.” Agents are local market experts. They know what’s worked for other buyers in your area and what sellers may be looking for in an offer. It may seem simple, but catering to what a seller needs can help your offer stand out. 2.Know Your Budget Understanding your budget is especially important right now. As Sandy Higgins, Senior Wealth Advisor at Capstone Financial Advisors, puts it: “Understand your current budget … what are your expenses, how’s your spending, would you need to make changes?” The best way to understand your numbers is to work with a lender so you can get pre-approved for a loan. It helps you be more financially confident, and it shows sellers you’re serious. That can give you a competitive edge. 3.Think Through Everything Before Making an Offer Today’s market isn’t moving at the record pace it did during the pandemic. That means you may have a bit more time to think before you need to make an offer. According to Danielle Hale, Chief Economist at realtor.com: “In general, you likely have more time to make an offer, although that’s certainly not a guarantee. If you’re on the fence about a home or its asking price doesn’t quite fit your budget, you might want to keep an eye on it, and if it doesn’t sell right away, you may have some room to negotiate with the seller.” While it’s still important to stay on top of the market and be prepared to move quickly, there can be more flexibility today. Lean on the advice of your agent as you explore the options in your market. 4. Work with Your Advisor To Negotiate During the pandemic, some buyers skipped home inspections or didn’t ask for concessions from the seller in order to submit the winning bid on a home. Fortunately, today’s market is different, and you may have more negotiating power than before. When putting together an offer, your trusted real estate advisor will help you think through what levers to pull. Bottom Line When you buy a home this spring, let’s connect so you have the guidance to make your best offer.

A lot has changed over the past year, and you might be wondering what’s in store for the spring housing market. If you’re planning to sell your house this season, here’s what real estate experts are saying you should keep in mind. 1. Houses That Are Priced Right Are Still Selling Houses that are updated and priced at their current market value are still selling. Jeff Tucker, Senior Economist at Zillow, says: “. . . sellers who price and market their home competitively shouldn’t have a problem finding a buyer.” The need to price your house right is so important today because the market has changed so much over the past year. Danielle Hale, Chief Economist at realtor.com, explains: “With a smaller pool of buyers today and more competition from other homes on the market, homesellers will likely need to adjust their price expectations in the market this spring.” While this spring housing market is different than last year’s, sellers with proper expectations who lean on a real estate expert for the best advice on pricing their house well are still finding success. And that’s great news if you’re thinking about selling. 2. Buyers Are Still Out There As mortgage rates have risen and remain volatile, some buyers have pressed pause on their plans. But there are still plenty of reasons people are buying homes today. Lisa Sturtevant, Chief Economist at Bright MLS, spells out the mindset of today’s buyers: “For some buyers, higher mortgage rates simply means buying a home is out of the question unless home prices fall. For others, higher mortgage rates will be a hurdle but ultimately will not keep them from getting back into the market after sitting on the sidelines for months.” That’s why, if you’re interested in selling your house this spring, it’s helpful to work with a real estate agent who can help connect you with those buyers who are ready to purchase a home. Bottom Line There are still clear opportunities for sellers this spring. If you’re wondering if it’s the right time to make a move, let’s connect today.

30YR Fixed 6.99% +0.02% 15YR Fixed 6.45% +0.02%   More Charts, Fewer Words (Recapping This Month's Mortgage Monitor From Black Knight) Black Knight releases a robust collection of mortgage/housing info each month via its Mortgage Monitor report.  There are always more charts than we have time and room to post, but the charts are typically more interesting than whatever we have to say about them.  So this month, let's try "more charts, fewer words." The report usually begins with delinquency stats.  This isn't too interesting for the average originator, but if anyone asks you if the present housing market is like it was in 2008, you can confidently tell them it's quite the opposite in terms of delinquencies. "Prepayment" is also a term that doesn't mean much to the average mortgage originator, realtor, or consumer, but it is slightly more interesting than delinquency stats.  Prepayment activity simply lets us know the reasons that loans are being paid off.  Refinances and sales are the biggest contributors, as you'd expect.  In this case, it's interesting to see how much of the heavy lifting is now down by home sales (pretty obvious, considering high rates' impact on refis).  Perhaps even more interesting is the ramp up in "curtailments" (extra principal paid down). No surprises here.  Purchase rate locks are at multi-year lows, but not too far below 2019. No surprises, for the most part, but some may be pleasantly surprised to see how steady the purchase market has been in terms of its contribution to overall origination numbers. Which direction are rates going for those who refi?  Naturally, it's hard for anyone's rate to be lower than it was before in this market.  This chart simply confirms that the vast majority of refis are for reasons other than rate reduction. The following chart is self-explanatory.  The blue line corresponds to the percentage of average income accounted for by the average mortgage payment.  It's currently at 33.2% vs a long-term average of 24%. Another look at affordability by metro area: Moving on to home prices, we come to this month's most interesting chart.  It shows annual price appreciation and truly embodies the age old point about "location."  In short, every major market west of The Rockies is in negative territory year-over-year, while all but Austin, TX are up year-over-year east of The Rockies. As for reasons, Black Knight notes that markets seeing the largest home price drops are both unaffordable (compared to their own long-run standards) and have smaller inventory deficits.