Emanuel Stewart - Reliant Home Lending

Archives for September 2019

What’s Ahead For Mortgage Rates This Week – September 30th, 2019

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What’s Ahead For Mortgage Rates This Week – September 30th, 2019Last week’s economic reports included readings from Case-Shiller on home prices along with data on new and pending home sales. Weekly readings on mortgage rates and initial jobless claims were also released.

Case-Shiller: Home Price Gains Slow to Lowest Pace in 7 Years

Case-Shiller Home Price Indices reported slower home price growth in July with 3.20 percent growth year-over-year. There was no change in July’s reading for the 20-City Home Price Index as compared to June after seasonal adjustments.

The top-three cities in Case-Shiller’s 20-City Home Price Index were Phoenix, Arizona with 5.80 percent home price growth year-over-year. Las Vegas, Nevada reported 4.70 percent growth and Charlotte, North Carolina home prices rose by 4.60 percent.

West coast cities that dominated home price growth in recent years have given way to more affordable markets. Seattle, Washington reported a negative reading of -0.60 percent year-over-year. Low mortgage rates have compelled buyers to enter the market; this could drive up demand again and boost home prices at a higher pace than they are rising now.

New and Pending Home Sales Increase in August

New home sales rose to 713,000 year-over-year in August as compared to July’s reading of 686.000 sales and expectations of 660,000 new homes sold in August. Pending sales rose 1.60 percent in August after posting a negative reading of -2.50 percent  in July.

Pending sales are transactions with signed purchase contracts, but that have not closed. Home sales typically taper off in fall after the peak selling season in spring and summer; rising sales during fall suggest stronger housing markets.

Mortgage Rates Fall, New Jobless Claims Rise

Freddie Mac reported lower mortgage rates last week; rates for 30-year fixed rate mortgages averaged 3.64 percent and were nine basis points lower than in the prior week. The average rate for 15-year fixed rate mortgages was five basis points lower at 3.16 percent and rates for 5/1 adjustable rate mortgages fell 11 basis points to an average of 3.38 percent. Discount points averaged 0.50 percent for fixed rate mortgages and 0.40 percent for 5/1 adjustable rate mortgages.

First-time jobless claims rose to 213,000 claims filed from 210,000 new claims filed the prior week. Analysts said the GM auto worker strike caused the increase in new claims.

What’s Ahead

This week’s scheduled economic news includes readings on construction spending and labor sector reports on public and private sector jobs and the national unemployment rate. Weekly readings on mortgage rates and new jobless claims will also be released.

Is It Possible To Have A Hurricane-Proof Home?

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Is It Possible To Have A Hurricane-Proof HomeThe recent total devastation of the Bahamas by hurricane Dorian reinforced the need for hurricane-proof homes in areas that are subject to this risk. Building codes have not kept up with the increasing severity of the weather.

Wind Damage

As an example, Florida communities, such as the Miami-Dade County area, have building codes that are designated by risk zones.

The risk zones in Miami-Dade County are:

  • Risk Category I – Buildings must be able to withstand 165 mph winds.
  • Risk Category II – Buildings must be able to withstand 175 mph winds.
  • Risk Category III – Buildings must be able to withstand 185 mph winds.

These building codes were last updated in 2010. Broward County in Florida has these same risk categories; however, the wind speeds are 10 mph lower for each category. Other parts of Florida have building codes that are even lower than these standards. Dorian reached a 183 mph wind speed. It stayed over the Bahamas for over fifty hours with these winds.

Water Damage

Water damage from hurricanes is more severe than wind damage. The storm surge for Dorian reached over 23-feet high in some places.

Hurricane Proofing

To withstand hurricane-force winds, the structure must be able to handle 180+ mph winds over an extended period. Damage done by the wind includes all the projectiles and debris being blown about. Some homes in the Bahamas had vehicles blown through walls.

The main consideration for wind damage is to use wind-resistant, shatter-proof glass for windows that are also protected by steel shutters, which can be closed when a hurricane is coming. These shutters close to protect other openings such as doors as well. Walls should be thick, reinforced concrete, especially the lower floors that need to resist both the wind and the water.

Water is going to come into the lower two floors of a home on the beach, so beach homes need to be at least three stories high. This may be challenging in some areas because of the building-height restrictions that are in place to prevent blocking other neighbors’ views of the ocean.

The idea is to make to bottom floors able to withstand water entering the home as if it is a swimming pool. When a hurricane is coming, you can move all the items from the lower floors to the upper floor.

In Holland, where many of the coastal cities are at sea level, their solution is to have homes that float. These homes near Amsterdam are like houseboats that are moored down very strongly so that they can rise with the storm surge but not float away.

Summary

There is not a 100% certain way to make a home completely hurricane-proof; however, there are examples of well-built homes that are the only ones left standing when the entire neighborhood is devastated by a hurricane.

When considering a home on the coast, it is better to build a new home to very high standards regardless of the building codes. In all coastal areas, building codes need to be updated to make the hurricane standards more robust because hurricanes are becoming stronger and more frequent.

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

Case-Shiller: July Home Price Growth Hits Lowest Pace in 12 Years

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Case-Shiller July Home Price Growth Hits Lowest Pace in 12 YearsCase-Shiller’s National Home Price Index reported U.S. home prices grew by 3.20 percent year-over-year in July; as compared to year-over-year home price growth 0f 3.00 percent posted in June. Cities with the highest rates of year-over-year home price growth were Phoenix, Arizona with 5.80 percent year-over-year home price growth. Las Vegas, Nevada had 4.70 percent year-over-year home price appreciation and Charlotte, North Caroline bumped Tampa, Florida from the top three cities with home price appreciation of 4.60 percent. Tampa, Florida posted 4.50 percent year-over-year home price growth in July.

Home Price Growth Stalls In West

14 cities had higher home price gains than in June and Seattle, Washington was the only city in the 20-City Index to post lower home prices. Analysts said that after years of rapid and unsustainable growth in home prices on the West Coast coupled with economic expansion and job growth in areas with lower home prices. July readings for home-price growth in western cities that posted double-digit price growth percentages in recent years were far lower. Home prices in Portland, Oregon rose 2.50 percent year-over-year; Los Angeles, California home prices rose 1.10 percent and San Francisco, California posted year-over-year home price growth of 0.20 percent.

High Home Prices Ease Demand Caused By Low Supply Of Homes For Sale

As home prices in many markets skyrocketed, would-be buyers were sidelined by affordability cash buyers and strict mortgage loan requirements. With home prices stabilizing and mortgage rates at near-record lows, more buyers will likely enter the market. This would increase demand on already slim supplies of homes for sale and cause home prices to rise at a faster pace than they have in 2019. Current rates of home price growth remain higher than current inflation and wage growth, but are low enough to encourage home buyers who were previously unable to keep up with rapidly rising home prices.

Seven cities posted higher rates of home price growth year-over-year in July as compared to readings for year-over-year home price growth from June 2018 to June 2019. The National Association of Realtors® said that sales of pre-owned homes were higher in July for the first time in months. The supply of available homes tightened in June; this trend is expected to boost home prices as demand for homes increases.

 

4 Reasons to Take Your Own Car When Viewing Homes

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4 Reasons to Take Your Own Car When Viewing HomesWhen you’re in the market for a new home to buy, your real estate agent will likely invite you to ride along with them to view homes. This is a convenient courtesy, but you may want to reconsider. Your other option is to follow the real estate agent in your own car instead.

Here are some reasons to take your own car when viewing homes:

1. It Gives You Time To Confer With Your Partner

After you’ve looked at one house, getting back into your private vehicle with your partner allows some time to openly talk about the house you just saw without worrying about how it may influence others. 

2. It Lets You Drive Slower

Real estate agents do quite a bit of behind-the-scenes preparation when showing homes. They may have driven to a property several times before they bring you to see it. As such, they may drive with the intent of “getting there,” while you may might like to drive slower so you can see more of the area.

When you follow behind in your own car, you can take your time or even slow down more if you see something of interest, like a park or an interesting coffee shop.

3. It Lets You Contemplate Specific Features

When you get back into your own car after viewing a house, you and your partner can sit in comfortable silence if you wish to think about certain features you really liked. This is also an opportune time to make mental notes of features you’d be interested in seeing in future houses. Once you get your list together you can talk about it later with your real estate agent.

4. It’s More Convenient If You Decide To Make An Offer

Let’s say you’ve just seen the house that you are positive you want to buy. You ask your agent to make a formal offer. Now the agent has to head back to the office to submit the offer.

If you’ve driven your own car, you can simply part ways and you go back to work or home and await the results. Otherwise, there’s a delay on the submission while the agent drops you at your house first.

The next time you spend an afternoon looking at houses with your agent, consider taking your own car. As you can see, it’s the smart option.

Partnering with a trusted home mortgage ptofessional is another important part of your home buying experience. Be sure to make contact to discuss current financing options and to get your pre-approval before you start house-hunting.

Expanding Opportunities For Home-Buying In ‘Opportunity Zones’

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Expanding Opportunities For Home-Buying In 'Opportunity Zones'Opportunity Zones were created by the 2017 Tax Cuts and Jobs Act to encourage investors with capital gains on other investments to invest that money in low-income and undercapitalized communities. They get a reward of deferring capital gains tax. They avoid a portion of it altogether if they keep the investment for five years or longer. 

What started with a trickle of a few Opportunity Zones scattered around the country is now a deluge with over 3,000 approved Opportunity Zones approved in just about every part of America. 4,700 more areas may also qualify.

Opportunity Zones Expanded Dramatically

The very generous definition of Opportunity Zones not only includes poorer areas but it also includes wealthy areas within larger poor areas. Some are wealthier areas adjacent to poor areas. For example, there are Opportunity Zones in Manhattan, which is an area not typically thought of as low-income or undercapitalized.

Opportunities In Opportunity Zones

The tax incentives along with the current easy financing from real estate lenders are stimulating development projects in Opportunity Zones. Investors may increase returns on real-estate investments by up to 50% for projects in these areas. 

The highest returns, based on the tax savings, are for those that invest before the end of 2019 and hold the investment for seven years until 2026. They get a capital gains step-up of 15%. After that, the tax benefits go down to a capital gains step-up of 10%.

Homes In Opportunity Zones

Another attractive characteristic is that the price of single-family homes in many Opportunity Zones is a bargain. The median price of homes in almost half of the Opportunity Zones is less than $150,000. This compares favorably to the national median home price of $266,000. 

Moreover, homes in many Opportunity Zones are less than half the price of an adjacent area. The median rents in the Opportunity Zones are not as depressed as the home prices.

For real estate investors looking for cash-flow positive rental properties to acquire for a portfolio, these homes may rent for enough to pay the carrying costs.

For home buyers, these bargain prices may mean it pays to buy a home on the edge of an Opportunity Zone. If the home is adjacent to a nicer neighborhood, the upside potential for appreciation in home value may be enhanced.

Opportunities for low-cost homes exist in the Midwest, which has 73% of its Opportunity Zones with homes that cost below $150,000. The portion in the South is 57% and in the North East, it is 53%. Florida has over 300 Opportunity Zones. Pennsylvania has over 150. Tennessee has about 140. Those are states worth considering.

Summary

Looking for home-buying opportunities in newly-designated Opportunity Zones is attractive for real estate investors building up a portfolio of rental properties and for homebuyers who are looking for a bargained-price home.

If you are in the market for a new home or investment opportunity, be sure to contact your trusted mortgage professional to discuss current financing options.

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