REAL ESTATE TOPICS...Each STATE's Absorption rate change

Absorption rate change

This map shows the fluctuation of the absorption rate per state from November 2014 to November 2015 and shows some regional trends as well. The absorption rate refers to the rate at which homes sell at the current market pace. It's calculated by using three data points: time frame, number of homes sold within that time frame and number of active homes within the time frame. Absorption rates improved in most states in November 2015, particularly on the West Coast. Eight states — mostly found on the East Coast — saw lower year-over-year changes in absorption rate, showing a slower housing market in a small number of regions.

State	Year-over-year change in absorption rate	Absorption rate for November 2015	Absorption rate for November 2014
AL	-51.1%	11.7%	23.9%
AZ	22.1%	20.4%	16.8%
CA	25.1%	36.9%	29.5%
CO	8.2%	68.0%	62.9%
CT	-23.3%	5.7%	7.4%
DE	12.7%	16.9%	15.0%
FL	32.0%	24.2%	18.3%
GA	10.5%	25.6%	23.2%
HI	7.7%	29.8%	27.6%
IA	2.4%	21.8%	21.3%
ID	31.8%	30.0%	22.8%
IL	9.2%	22.0%	20.1%
IN	11.7%	10.8%	9.6%
KY	15.3%	21.8%	18.9%
LA	1.4%	19.6%	19.3%
ME	9.1%	15.7%	14.4%
MI	12.5%	26.0%	23.1%
MN	30.7%	32.7%	25.0%
MO	22.8%	24.2%	19.7%

State	Year-over-year change in absorption rate	Absorption rate for November 2015	Absorption rate for November 2014
NC	15.4%	20.8%	18.0%
NE	24.1%	30.1%	24.3%
NH	13.3%	17.8%	15.7%
NJ	5.2%	12.2%	11.6%
NV	29.0%	29.9%	23.2%
NY	12.0%	12.6%	11.2%
OH	18.3%	23.1%	19.6%
OK	-4.4%	24.6%	25.7%
OR	105.1%	16.1%	7.8%
PA	4.6%	16.4%	15.7%
RI	4.9%	17.0%	16.2%
SC	-7.2%	13.6%	14.6%
SD	-12.1%	19.8%	22.6%
TX	-6.7%	33.6%	36%
VA	-8.4%	17.5%	19.1%
VT	12.5%	10.1%	9.0%
WA	47.8%	49.8%	33.7%
WI	3.6%	20.0%	19.3%
WV	-7.3%	17.4%	18.8%

The table provides the data on which the map is based. Oregon, Washington, Florida and Idaho led in year-over-year changes. Oregon's rate more than doubled from 7.8% to 16.1%, indicating that its market has improved the most since November 2014. Colorado had the highest absorption rate this year and last, reaching 68% in November 2015, an indication of slightly less than one and a half months' supply of homes on the market. The positive rate across almost all states indicates home buying season remained strong through November 2015.

Source data: CoreLogic® 
Data date: 12/25/15

Economic snapshot

This chart gives a quick look at current economic conditions compared to where we've been in the last 30 years. Employment growth is well above its 30-year average but lower than one year ago. The higher-than-average job gains over the past year point to a healthy labor market.

Economic indicator	30-year minimum month-over-month change	30-year maximum month-over-month change	11/2015 month-over-month change	11/2014 month-over-month change
Employment growth	-0.618%	0.479%	0.177%	0.302%
Consumer spending growth	-2.023%	2.770%	0.324%	0.281%
Inflation	-1.131%	0.967%	0.028%	-0.144%

 

The table above illustrates that inflation was at 0.028% in November, which is higher than one year ago but still very close to zero. There is currently very little pressure from inflation on interest rates, keeping them low even after the Federal Reserve's recent interest rate hike. Consumer spending, which accounts for more than two-thirds of the nation's economic activity, is close to its 30-year average, rising by about 0.324%. An improving labor market with wage growth should continue to contribute to consumer spending growth.

Source data: The Bureau of Labor Statistics & Bureau of Economic Analysis 
Data date: 12/28/15

REAL ESTATE TOPICS...10 Money-Wasting Habits You Can Ditch

By Barbara Pronin

Whether it’s a latte you could have done without, or a cute pair of shoes you didn’t need, even the most frugal folks among us waste a little money now and then. But penny-pinchers seem to make it a habit not to make it a habit.

Smart Money blogger Emily Co talked to a group of determined savers. Here are the top money-wasters they identified. How many of them can you cut out?

1. Paying Bank Fees

Do you even know about, much less track, the fees your bank may be charging you? From checking fees to overdraft fees to third-party ATM fees, you should do what you must to avoid them.

2. Tossing Leftovers

Whether at home or at a restaurant, throwing away leftovers instead of eating them the next day is a huge and avoidable waste of money.

3. Buying Stuff at Convenience Stores

How much do you want that soda or candy bar when filling up at the gas station? Convenience store prices are very high. Think twice before you buy.

4. Heating and Cooling Costs

Properly insulating your home and caulking up cracks and crevices under doors can save a bundle in the long run.

5. Unclaimed Rebates and Returns

You’re throwing away cash if you’re not redeeming rebates or neglecting to return the little things you purchased but do not want.

6. Bottled Water

Get a filter and start carrying your own bottled water from home instead of paying for and clogging the ecosystem with plastic bottles.

7. Not Buying Generics

There may some generics that don’t meet your standards, but try as many generic drugs, cosmetics and other products before deciding they are not for you.

8. Buying Everything New

Browse through a second-hand store now and then to prove to yourself that not everything needs to be purchased new.

9. Ignoring Discount Stores

Bargains abound at the dollar store as well for those who want to be more frugal.

10. Paying for Services You Can Do Yourself

Why pay for lawn mowing or changing the oil in your car when you can save by doing it yourself? A little online instruction may be all you need to start hanging on to more of your money.

REAL ESTATE TOPICS...Real Estate Ranked Second-Happiest Industry

If you work in real estate, you chose one of the happiest careers, according to a new survey of more than 60,000 employees from 13 different industries. Real estate ranked number 2, behind consumer products and services, in TINYpulse’s “2016 Best Industry Rankings” survey, which studied employee engagement and satisfaction across 13 industries.

TINYpulse’s study found three themes emerging among this year’s most satisfied workers:

1. “Culture is key”: Happy employees tend to boast about having great teammates and management that displays transparency.
2. “It’s not where they start; it’s where they finish”:Employees need to feel like they have a place for advancement.
3. “Employees want to have a say”: Employees want to feel like their company values feedback and take it seriously.

Here’s how the 13 industries analyzed stacked up against one another, ranked from happiest to least happy.

1. Consumer Products & Services
2. Real Estate
3. Technology & Software
4. Hospitality
5. Finance & Insurance
6. Arts & Entertainment
7. Construction & Facilities Services
8. Education
9. Healthcare, Pharma & Biotech
10. Professional Services & Consulting
11. Manufacturing
12. Government & Nonprofit
13. Energy, Mining & Utilities

REAL ESTATE TOPICS...2015 New-Home Sales Reach Eight-Year High

Sales of newly built, single-family homes rose 14.5 percent to 501,000 units in 2015, the highest level since 2007, according to newly released data from HUD and the U.S. Census Bureau. Meanwhile, sales in December increased 10.8 percent to a seasonally adjusted annual rate of 544,000 from an upwardly revised November reading. 

“The December sales report is a great end to a very strong year,” said Ed Brady, chairman of the National Association of Home Builders (NAHB) and home builder and developer from Bloomington, Ill. “As we move forward in 2016, we should see the housing market continue to make lasting gains.”      

“Relatively low interest rates and an improving economy are motivating buyers to make a new-home purchase,” said NAHB Chief Economist David Crowe. “Builders are upping their inventory in response to heightened consumer interest. Housing inventory is now at its highest level since October 2009.”

Sales increased in all four regions in December. The Midwest, West, Northeast and South all posted respective gains of 31.6 percent, 21 percent, 20.8 percent and 0.4 percent.

The inventory of new homes for sale was 237,000 units in December. This is a 5.2-month supply at the current sales pace.

REAL ESTATE NEWS...Rates are tanking and they could plunge further

Fear is gripping the bond market.

ISM data released Wednesday showed the services sector didn’t grow as much as was expected in January. That spooked traders and sent them scrambling to the safety of bonds.

The yield on the U.S. 10-year Treasury note (^TNX) dropped below 1.8% at one point on Wednesday as bonds rallied. Toward the end of the trading day, bond yields rebounded to 1.88%. Bond yields fall as prices rise.

Nonetheless, the market is trying to guess whether the Fed will raise rates at all this year. In December, the Federal Reserve increased its federal funds target rate range to between 0.25% and 0.50% from the previous range of 0% to 0.25%, where it was for 7 years.

According to data from the Chicago Mercantile Exchange, futures on the fed funds indicate the market doesn’t expect a rate hike this year or even at the start of 2017.

“The Federal Reserve seems to have lost a little bit of that control they've had over the last seven years during their zero interest rate monetary policy,” said Todd Colvin, senior vice president at Ambrosino Brothers.

He sees traders convinced that the Fed has lost its resolve. “If you go back to January 6, vice chairman [Stanley] Fischer mentioned the idea that there was a possibility of three to four rate hikes in this calendar year,” said Colvin from the CME. “On Monday of this week, he said there is no real timetable for any rate hike. And I think that that really spoke volumes to the market.”

Colvin expects more bond buying ahead as fears rise and investors search for quality and safety. “There's a place to be right now and that's in riskless assets,” he said. “And the favorite riskless asset on the globe is the U.S. Treasury.”

Should buyers bid up American government bonds, Colvin sees yields on the U.S. Treasury 10-year note falling a lot further.

“I think that 10-year yields could easily get to 1.5%,” he said, “not only because of weakness in the economy and low inflation but you have that pesky U.S. election coming up. And that could hinder the Fed's ability to really manipulate monetary policy at a time when, really, you want things to be apolitical as we walk into an election.”

“Right now, 1.5% target, but I certainly wouldn't make that the floor,” he said.

REAL ESTATE NEWS...Military Buyers Spur VA Loan Program to Record Year

By
Chris Birk

A home loan program steeped in history continues to make it. The United States Department of Veterans Affairs, known as the VA, backed an all-time record 631,151 loans in fiscal year 2015, eclipsing the previous high-water mark set just two years prior.

More and more veterans are using these flexible, $0 down loans to crack the housing market during a time of tight credit and limping wages. A good year for the industry was a great one for military buyers: VA purchase loans surged 19% year over year, according to recently released figures.

To put that growth into perspective, the VA guaranteed more loans to buy homes last year (322,120) than it did total loans—whether they be purchase loans or refinances—in fiscal year 2010 (314,011).

The outlook for this 71-year-old benefit program is bright, too. The population of younger veterans is expected to increase 36% over the next five years, according to a recent Deutsche Bank analysis.

To be sure, VA loans aren’t the right fit for every veteran. But they’re also no longer on the sidelines. In fact, in many ways, these government-backed loans are arguably the most powerful mortgage product on the market.

Keeping pace

Greater awareness of the benefits—and the surprising safety—of VA loans has propelled market share in recent years. Credit guidelines for VA loans are generally more forgiving compared with conventional loans, and VA buyers don’t have to spend years scraping up a down payment.

That one-two punch helps make homeownership possible for scores of veterans and military families who might otherwise miss out. The average VA buyer has about $7,000 to $8,000 in assets, according to the VA. These loans also carry no mortgage insurance and limit what buyers can pay in closing costs.

VA loan growth comes as some longtime misconceptions about the program—along with legitimate shortcomings—continue to fade. Dogged for years by a reputation for sluggishness and bureaucracy, VA loans now keep pace with their mortgage counterparts, if not lead the way.

In December, the average VA purchase loan closed in 51 days, just one day longer than the average conventional purchase, according to Ellie Mae. For each month of 2015, VA loans had the lowest average 30-year fixed interest rate and the highest closing success rate among the three major loan types (VA, FHA, and conventional).

And in one critical area—foreclosure avoidance—this $0 down loan has become an industry leader. VA loans have had the lowest foreclosure rate of all loan types for 25 of the past 28 quarters, according to the Mortgage Bankers Association.

Helping a new generation

Now in its seventh decade, a loan program that began with the original GI Bill is in many ways more important than ever.

Access to mortgage credit is thawing, but it’s still tough for many veterans and military families to build the credit and asset profile necessary for conventional financing. For those would-be buyers, the program continues to fulfill its original mission of leveling the playing field for those who serve.

A more recent development is the emergence of VA loans as a go-to mortgage option for veterans who do have the credit and finances to land a conventional loan. Everyone’s situation is different, but these flexible and forgiving loans can be just as powerful for a well-qualified buyer as they are for those on the edge.

REAL ESTATE NEWS...Mortgages are still getting cheaper

Mortgage rates are dropping.

by Kathryn Vase

In December, when the Federal Reserve raised rates for the first time in nearly a decade, many would-be homebuyers assumed it meant the beginning of the end for record-low mortgage rates.

"This is evidence that the Federal Reserve isn't the sole determinant of U.S. mortgage rates," said Mark Hamrick, senior economic analyst at Bankrate.

The 30-year mortgage rate fell to 3.79%, the fourth straight week of declines, according to Freddie Mac. A year ago, the rate averaged 3.66%.

The rate on a 15-year fixed mortgage also dropped to 3.07%.

On Wednesday, following weeks of volatility on Wall Street and global markets, the central bank left the benchmark rate unchanged. The rate-setting committee will meet again in March.

While the central bank doesn't control mortgage rates, a higher Federal Funds rate makes it more expensive for banks to borrow money, which can ultimately be passed on to consumers taking out loans.

Lower interest rates are good news for homebuyers looking to get into the market. "This is one of the remarkable positive influences we are seeing being exerted in the housing market right now," said Hamrick.

But tight inventory has helped push home prices higher, creating an affordability problem in many markets throughout the country.

In response to the lower rates, mortgage applications ticked up 8.8% last week.

While lower rates help both buyers and sellers, it's unclear how long they will last.

"The future direction of rates remains to be seen, and will be based on the health of the economy," said Hamrick.

REAL ESTATE TOPICS...5 Mortgage Misconceptions Set Straight

BY JULIAN HEBRON

Looking for a home loan? Make sure you’ve got the facts, then proceed with confidence.

Getting a mortgage can be a breeze or a slog, depending on what you know about the process. To get organized and set your expectations properly, let’s debunk some common mortgage myths.

Your best credit scores are used in your loan approval

If you’re applying for a mortgage jointly with a co-borrower, logic suggests that your lender would use the highest credit score between both of you.

However, lenders take the middle of three credit scores (from Equifax, TransUnion, and Experian) for each borrower, then use the lowest score between both borrowers’ “middle scores.” So if you had a middle score of 780 and your co-borrower had a middle score of 660, most lenders would qualify and approve you using the 660 credit score.

Rates are tied to credit scores, so in this example, your rate would be based on the 660 credit score, which would push your rate up significantly — or potentially even make you ineligible for the loan.

There are exceptions to this lowest-case-credit-score rule. Most notably, if you have the higher credit score and are also the higher earner, some lenders will allow your higher credit score on the file — but this is mostly for jumbo loans above $417,000.

Ask your lender about exceptions if you have credit score disparity between co-borrowers, but know that these exceptions are rare.

The rate you’re quoted is the rate you’ll get

Unless you’re locking in a rate at the moment it’s quoted, that rate quote can change. Rates are tied to daily trading of mortgage bonds, so most lenders’ rates change throughout each day.

Refinancers can often lock a rate when it’s quoted — as long as you’ve given your lender enough information and documentation to determine if you qualify for the quoted rate.

Homebuyers will often be quoted a rate when you’re beginning your pre-approval process, but a rate lock runs with a borrower and a property. So until you’ve found a home to buy, you can’t lock your rate. And while you’re home shopping, rates will be changing daily, so you’ll need updated quotes from your lender throughout your home shopping process.

Rate quotes also come with an annual percentage rate (APR), which is a federally required disclosure that shows what your rate would be if all loan fees are incorporated into the rate.

This can make you think that APR is the rate you’ll get, but your loan payment will always be based on your locked rate, and the APR is just a disclosure to help you understand fees.

Fixed rate mortgages are always better than adjustable rate mortgages

Many borrowers became conservative in the recessionary years that followed the 2008 financial crisis, and strongly prefer 30-year fixed loans.

For good reason, too: The rate and payment on a 30-year fixed loan can never change. But the longer the rate is fixed for, the higher the rate. So before settling on a 30-year fixed, ask yourself this question: How long am I going to own this home (or keep the loan) for?

Suppose the answer is five years. If you got a 5-year adjustable rate mortgage (ARM) instead of a 30-year fixed, your rate would be about .875 percent lower. On a $200,000 loan, you’d save $146 per month in interest by taking the 5-year ARM. On a $600,000 loan, the monthly interest cost savings is $438.

To optimize your home financing, you want to peg the loan term as closely as you can to your expected time horizon in the home.

Real estate agents don’t care which lender you use

A federal law enacted in 1974 called the Real Estate Settlement Procedures Act (RESPA) prohibits lenders and real estate agents from paying each other fees to refer customers to each other. So as a mortgage shopper, you’re always free to use any lender you choose.

But real estate agents who would represent you as a buyer do care which lender you use. They’ll often suggest that you use a local lender who’s experienced with nuances of your area, such as local taxation rules, settlement procedures, and appraisal methodologies. Each of these areas are part of the loan process, and can delay or kill deals if a non-local lender isn’t experienced enough to handle them.

Likewise, real estate agents representing sellers on homes you’re interested in will often prioritize purchase offers based on the quality of loan approvals. Local lenders who are known and respected by listing agents give your purchase offers more credibility.

Mortgage insurance is always required if you buy with less than 20 percent down

Mortgage insurance is a lender risk premium placed on many home loans when you’re putting less than 20 percent down. In short, it means your total monthly housing cost is higher. But you can buy a home with less than 20 percent down and avoid mortgage insurance.

The most common way to do this is with a combination first and second mortgage — often called a piggyback — where the first mortgage is capped at 80 percent of the home’s value, and the second mortgage is for the balance of what you want to finance.