Navy Fellas Realty Group

Real Estate, Residential sales and purchase

How To Beat High Inflation with a Home Purchase

by

How To Beat High Inflation with a Home PurchaseInflation can erode the value of your savings over time, and one way to hedge against inflation is by investing in assets that appreciate in value over time. Real estate is often considered a good hedge against inflation, as property values tend to rise in line with inflation.

Here are some ways a home purchase can help beat high inflation:

Lock in a low-interest rate mortgage: High inflation often leads to higher interest rates, but if you lock in a low-interest rate mortgage when inflation is low, you can benefit from lower mortgage payments even if interest rates rise in the future. This can free up more money for other expenses and investments.

Appreciation: Real estate values tend to rise over time, especially in areas with high demand and limited supply. If you purchase a home in an area that is likely to appreciate, you can benefit from the increase in value over time.

Rental income: If you purchase a home as an investment property, you can generate rental income that increases with inflation. Rental income can provide a steady stream of passive income that can keep up with inflation.

Tax benefits: Homeowners can deduct mortgage interest and property taxes from their federal income taxes, which can help offset the costs of homeownership. These deductions can be especially valuable during times of high inflation when other deductions may lose value.

Diversification: Investing in real estate can diversify your investment portfolio, reducing the overall risk of inflation. Real estate has historically performed well during periods of inflation and can provide a valuable hedge against the erosion of purchasing power caused by inflation.

It’s important to note that buying a home should be a long-term investment strategy, and not a short-term solution to beat inflation. Real estate values can fluctuate over short periods of time, and it may take several years to recoup your investment. It’s also important to consider the costs of homeownership, such as maintenance, repairs, and property taxes, when evaluating the potential benefits of purchasing a home.

S&P Case-Shiller: December Home Price Growth Slows

by

S&P Case-Shiller: December Home Price Growth SlowsHome price growth slowed in December according to the S&P Case-Shiller 20-City Home Price Index. Year-over-year home prices rose by 4.6 percent in December as compared to November’s reading of 6.8 percent growth. Rising mortgage rates caused home prices to dip as potential buyers delayed home purchases and demand for homes fell.

Craig J. Lazzara, managing director of S&P Dow Jones Indices, said: “The prospect of stable, or higher mortgage rates means that mortgage financing remains a headwind for home prices, while economic weakness, including the possibility of a recession, may also constrain potential buyers. Mr. Lazzara concluded: “Given these prospects for a challenging macroeconomic environment,  home prices may well continue to weaken.”

The S&P Case-Shiller National Home Price Index fell by a seasonally-adjusted figure of -0.30 percent in December but rose by 5.80 percent year over year.

S&P Case-Shiller 20-City Index Shows Slowing Home Price Growth for December

Nationally home prices fell by -0.30 percent month-to-month and were 5.80 percent higher year-over-year.

Case-Shiller’s 20-City Home Price Index is widely used as a benchmark for U.S. home prices; December’s top three cities for rising home prices were Miami, Florida with 15.90  percent year-over-year home price growth; Tampa, Florida followed with 13.9 percent home price growth and Atlanta, Georgia reported 10.4 percent year-over-year home price growth in December.  The 20-City Index reported 4.60 percent year-over-year home price growth as compared to November’s reading of 6.80 percent year-over-year home price growth.

Home prices fell the most in formerly hot markets; in San Francisco, California home prices dropped by -4.20 percent year-over-year and home prices fell by -1.80 percent in Seattle, Washington. Portland, Oregon had the lowest pace of home price growth with a year-over-year reading of 1.10 percent.

In related news, the Federal Housing Finance Agency reported home price growth data for homes owned or financed by Fannie Mae and Freddie Mac. Home prices rose 8.40 percent year-over-year between the fourth quarters of 2021 and 2022.

Analysts said that lower home prices were caused by rising mortgage rates and lower demand for homes caused by buyers’ concerns about a possible recession. Limited supplies of available homes helped reduce potential losses caused by less buyer demand for homes. High mortgage rates, competition with cash buyers, relatively high home prices, and slim supplies of available homes continue to present challenges to first-time and moderate-income home buyers.

 

Maximize Your Investment: When To Sell Your House

by

Maximize Your Investment: When To Sell Your HouseYour house is an investment, and it is important for you to treat it as such. Therefore, when is the best time to sell your house? You need to figure out how you can get the most money for your home while also lining up the sale of your house with the timeline of your life. What do you need to know?

Sell Your Home When The Market Is Hot

First, you should sell your home when the market is hot. This means that there are more people looking for houses than there are houses on the market. This is basic supply and demand. If there is a lot of demand for houses, but there are not a lot of houses for sale, you should be able to get more money for your house. Typically, there are more buyers interested in purchasing a house when mortgage rates drop. Keep an eye on mortgage rates to figure out when to sell your home.

Sell Your Home When You Need The Money

You should also consider selling your house when you need the money. This means that if you have a major life event, you might need to tap into your source of reserves. For example, if there is a major medical bill, a death in the family, the arrival of a new baby, or a major move coming up, you should consider selling your house. That way, you have cash on hand to cover these expenses. 

Sell Your Home When You Have Other Sources Of Passive Income

Finally, if you feel like you have other sources of passive income, you may want to free up some cash by selling your house. Other ways you might generate passive income include stock dividends or the sale of a business. If you think you have enough other sources of passive income, it might be time for you to sell your investment property. 

Time The Sale Right To Maximize The Return On Your Investment

These are a few of the most important factors you should keep in mind if you are thinking about selling an investment property. Consider working with a professional who can help you maximize the return on your real estate investment. 

 

What’s Ahead For Mortgage Rates This Week – May 9, 2022

by

What's Ahead For Mortgage Rates This Week - May 9, 2022Last week’s scheduled economic reports included readings on construction spending, the Federal Reserve’s Federal Open Market Committee statement, and the Fed Chair’s press conference. Readings on public and private-sector jobs growth and the national unemployment rate were released along with weekly readings on mortgage rates and jobless claims.

Construction Spending Slows in March, Fed Raises Key Rate

Construction spending fell in March according to the Commerce Department. Spending increased by 0.10 percent as compared to the expected reading of 0.80 percent and February’s reading of 0.50 percent. Less construction spending could indicate a slowdown in building as builders face rising operations and materials costs. 

The Federal Reserve’s Federal Open Market Committee initially considered raising the federal rate to 0.75 percent, but Fed Chair Jerome Powell vetoed that option, and committee members agreed to raise the federal funds rate to 0.50 percent. This increase was the highest in more than 20 years.

Chair Powell said in his post-meeting press conference that he wanted to address the American people and that inflation was too high. “We understand the hardship it’s causing and we’re moving expeditiously to bring it back down. We have the tools we need and the resolve that it will take to restore price stability on behalf of American families and businesses.” Mr. Powell declined to identify a specific number defining the Fed’s goal of achieving a “neutral” average interest rate.

Mortgage Rates Rise, Jobless Claims Data Mixed

Freddie Mac reported higher mortgage rates as the average rate for 30-year fixed-rate mortgages rose by 17 basis points to 5.27 percent; rates for 15-year fixed-rate mortgages averaged 4.52 percent and 12 basis points higher than in the prior week. Rates for 5/1 adjustable-rate mortgages averaged 3.96 percent and 18 basis points higher. Discount points for 30-year fixed-rate mortgages averaged 0.90 percent and 0.80 percent for 15-year fixed-rate mortgages. Points for 5/1 adjustable-rate mortgages averaged 0.20 percent.

New jobless claims rose to 200,000 initial claims filed last week as compared to 181,000 new claims filed in the prior week. Analysts expected a reading of 182,000 new claims filed. Fewer continuing jobless claims were filed last week with 1.38 million claims filed as compared to the prior week’s reading of 1.40 million ongoing jobless claims filed.

The economy added 428,000 public and private-sector jobs in April; the national unemployment rate was unchanged at 3.60 percent. 

What’s Ahead

This week’s scheduled economic reporting includes readings on inflation and the University of Michigan’s consumer sentiment index. Weekly readings on mortgage rates and jobless claims will also be released.

S&P Case-Schiller Indices Report Record Rise in Home Prices

by

S&P Case-Schiller Indices Report Record Rise in Home PricesHome prices continued to rise at record rates in May according to S&P Case-Shiller Home Price Indices. National home prices rose by 16.60 percent year-over-year in May as compared to 14.80 percent year-over-year price growth in April. The 10-City Home Price Index reported home prices rose 16.40 percent year-over-year and 1.90 percent month-to-month.

20-City Home Price Index Reports 17 Percent Home Price Growth Year-Over-Year

S&P Case-Shiller’s 20-City Home Price Index reported month-to-month home price growth of two percent in May as year-over-year home price gains rose from April’s reading of 15 percent to 17 percent year-over-year home price growth.

All cities participating in the 20-City Home Price Index reported home price gains in May. Three cities held their positions with top rates of home price growth. Phoenix Arizona held first place with year-over-year home price growth of 25.90 percent; San Diego, California reported 24.70 percent home price growth. Seattle Washington held third place with 23.40 percent year-over-year home price growth in May.

Home Price Growth Expected to Slow as Buyers Drop Out of Market

Craig Lazarra, managing director and global head of index investment strategy at S&P down Jones Indices said he found himself “running out of superlatives to describe the record increases in home prices.” Analysts credited homebuyer relocation from urban areas to less populated suburban and rural areas for driving up prices. The pandemic initially drove this trend and continues to do so today. Other factors pushing home prices higher included high demand for homes exceeding homes available. As millennials reach their prime-home buying years, demand for homes will increase. Low mortgage rates also encouraged would-be home buyers into the housing market.

High demand for homes drives home prices up, but slower sales suggest that buyers are reaching a tipping point with affordability. Fewer buyers will raise the inventory of available homes and cause home prices to fall. First-time and moderate-income buyers continue to face affordability constraints in many areas, but home prices likely won’t fall significantly in the near term.

In related news, the Federal Housing Finance Agency reported similar readings for single-family homes owned or financed by Fannie Mae and Freddie Mac. Home prices rose 1.70 percent from April to May and 18.00 percent year-over-year in May. Readings from FHFA include seasonally-adjusted purchase-only data;  refinance transactions were not included.

Case-Shiller Reports Home Prices Rise at Fastest Pace in 7 Years

by

Case-Shiller Reports Home Prices Rise at Fastest Pace in 7 YearsS & P Case-Shiller Home Price Indices reported the fastest pace of U.S home price growth in seven years. National home prices grew by 10.40 percent year-over-year in December as compared to November’s reading of  9.50 percent home price growth on a year-over-year basis.

The S&P Case-Shiller 20-City Home Price Index reported home price growth in 18 of 20 cities included in the index. Detroit, Michigan did not report home price data for December. Phoenix, Arizona held the top position in the 20-City Index for the 19th consecutive month with year-over-year home price growth averaging 14.40 percent. Home prices in Seattle, Washington home prices held second place with year-over-year growth of 13.60 percent. San Diego, California home prices grew 13.00 percent year-over-year.

The Federal Housing Finance Agency released home price data for homes owned or financed by Fannie Mae and Freddie Mac. Home prices rose by 10.80 percent in the fourth quarter of 2020 as compared to home prices in the fourth quarter of 2019. Home prices reported by FHFA rose by 3.80 percent between the third and fourth quarters of 2020.

Idaho home prices reported by FHFA rose by 21.10 percent year-over-year.  Montana home prices grew by 15.50 percent; Utah followed closely with 15.40 percent home price growth. FHFA reported the highest pace of home price growth for cities in Boise, Idaho; home prices in San Francisco, California grew at the slowest pace. This data supports the trend of homeowners moving from costly metro areas to inland suburbs where they can buy larger homes for lower prices.

Rapidly Rising Home Prices Impact Affordability

While homeowners welcome quickly rising home prices, affordability issues worry real estate analysts and prospective home buyers. The covid-19 pandemic caused home prices to rise as homeowners fled congested urban areas for suburban and rural areas.

Supplies of available homes fall as demand for homes keeps rising during the pandemic. Millennials are in their peak home-buying years but many current homeowners are waiting out the pandemic to sell. Low inventories of available homes and rising building materials costs add to the shortage of homes in general and affordable homes in particular.

First-time and moderate-income home buyers face increasing challenges as home prices and mortgage rates rise. Mortgage approval standards are difficult to meet as rising home prices cause housing payments and down payment requirements to increase. In addition to property taxes and hazard insurance, buyers who cannot pay 20 percent down must also pay for mortgage insurance.

Skyrocketing home prices should ease when demand for homes slows, but that won’t happen until supplies of available homes catch up to buyer demand.

What’s Ahead For Mortgage Rates This Week – October 5, 2020

by

What's Ahead For Mortgage Rates This Week - October 5, 2020Last week’s economic news included readings from Case-Shiller Home Price Indices, along with Commerce Department readings on public and private-sector job growth and the University of Michigan’s Consumer Sentiment Index. Weekly reports on jobless claims and mortgage rates were also released.

Case-Shiller: Home Price Growth Ramps Up as Demand for Homes Increases

July home prices rose at a year-over-year rate of 4.80 percent in July as compared to June’s reading of 4.40 percent. Shortages of available homes were driven by demand. Homebuyers were looking for larger homes to accommodate working from home and also wanted to leave congested urban areas.

Home prices in Case-Shiller’s 20-City Index rose by 3.90 percent year-over-year in July; Home prices in participating cities grew by 3.50 percent in June. Home prices grew fastest in Phoenix, Arizona with a year-over-year growth rate of  9.20 percent. Seattle, Washington home prices grew by 7.00 percent, and home prices in Charlotte, North Carolina rose by 6.00 percent.

Craig Lazzara, managing director and global head of index investment strategy at S&P Dow Jones Indices, said,

“Prices were particularly strong in the Southwest and West were comparatively weak in the Midwest and Northeast.” 16 of 19 cities in the 20-City Home Price Index reported a faster growth rate for July’s home prices. Detroit, Michigan did not report data for July’s 20-City Home Price Index.

Construction spending in August jumped from July’s reading of 0.70 percent growth to 1.40 percent. This could be positive news if it indicates a faster pace of home construction, but it could also reflect higher prices for building materials. Rising costs of building materials are typically added to home prices, which further challenges first-time and moderate-income home buyers.

Mortgage Rates and Jobless Claims Fall

Freddie Mac reported lower fixed mortgage rates last week; The average rate for a 30-year fixed-rate mortgage dropped two basis points to 2.88 percent; rates for 15-year fixed-rate mortgages averaged four basis points lower at 2.36 percent. The average rate for 5/1 adjustable rate mortgages was unchanged at 2.90 percent. Discount points averaged 0.80 percent for 30-year fixed-rate mortgages and 0.70 percent for 15-year fixed-rate mortgages. Discount points for 5/1 adjustable rate mortgages 0.20 percent. 

New jobless claims fell to 837,000 claims filed from the prior week’s reading of 873,000 initial claims filed. Ongoing claims were also lower last week with 11.77 million filings as compared to 12.75 million ongoing claims filed in the previous week.

The national unemployment rate dipped below 8.00 percent for the first time since March with a reading of 7.90 percent. Analysts said that the number of people in the workforce dropped from 164.5 million in February to 160.1 million workers in September; this indicates that 4.4 million workers have left the workforce.

Consumer sentiment rose to its highest level since March according to the University of Michigan’s Consumer Sentiment Index reading for September was 80.40 as compared to August’s index reading of  74.10.

What’s Ahead

This week’s scheduled economic news includes readings on job openings and the minutes from the Fed’s Federal Open Market Committee meeting. Readings on public and private-sector jobs will also be reported.

Case-Shiller: Home Price Growth Grinds to Lowest Rate in 2 Years

by

Case-Shiller: Home Price Growth Grinds to Lowest Rate in 2 YearsHome prices rose by 0.40 percent in October according to Case-Shiller’s 20-City Home Price Index and were unchanged from September’s year-over-year reading of 5.50 percent growth.

Slower growth in home prices could help some would-be home buyers enter the market, but rapidly rising mortgage rates have sidelined buyers concerned with affordability and meeting strict mortgage lending requirements.

High Mortgage Rates Stifle Demand for Homes

October’s year-over-year reading for home price growth was the lowest in two years, but home price growth continued to exceed wage increases; builders continued to face labor shortages and higher materials costs. Rising mortgage rates were a major cause of lower demand for homes as the average rate for a 30-year fixed rate mortgage increased from les than 3.50 percent at the beginning of 2017 to a high point of 4.94 percent in September.

Mortgage rates have fallen in recent weeks but remain more than one percent higher than they were two years ago. Recent volatility in financial markets and concerns over general economic conditions also contributed to a lower pace of home price growth.

Las Vegas Leads Cities with Highest Home Price Growth

The top three cities in October’s Case-Shiller 20-City index were Las Vegas, Nevada with year-over-year hone price growth of 12.80 percent; San Francisco, California’s home prices rose by 7.90 percent year-over-year and Phoenix, Arizona home prices rose by 7.70 percent year-over-year. 

October’s home price growth rates suggest that West Coast cities such as San Francisco, and Seattle, Washington may be losing their domination over double-digit home price growth rates they’ve enjoyed in recent years. Slower rates of home price growth could indicate that home prices have topped out in costly metro areas.

David M. Blitzer, managing director and chair of S&P Dow Jones Index Committee, echoed analyst’s concerns: “Rising home prices and mortgage rates mean fewer people can afford to buy a house.” The Fed’s recent decision to raise its key interest rate range for the third time in 2018 concerned some economists, but the Fed said that its Federal Open Market Committee predicts that it will raise rates only twice next year based on current and expected economic conditions in 2019.

Banks and credit-card companies typically follow the Fed’s interest rate decisions; this means that rates for consumer lending including mortgages are likely to increase in 2019.

Newest Home Pricing Data Shows Homes Becoming More Attainable Across The Country

by

Newest Home Pricing Data Shows Homes Becoming More Attainable Across The CountryCase-Shiller’s 20-city home price index for September reported the lowest pace of year-over-year home price growth in almost two years. Lower home prices balanced housing markets between sellers and buyers, but home prices continued to grow approximately two times faster than wage growth.

Case-Shiller’s 20 city home price index for September posted a home price growth rate of 5.20 percent as compared to August’s year-over-year growth rate of 5.70 percent. While analysts expected slower rates of home price growth, they weren’t expecting the steep declines seen in September’s report.

David Blitzer, Chairman and CEO of the S&P Dow Jones Indices Committee, said “Home prices plus data on house sales and construction confirm the slowdown in housing.”

Las Vegas Holds on to Top Spot in Home Price Growth

Las Vegas, Nevada had the highest pace of home price growth with a year-over-year reading of 13.50 percent; San Francisco, California posted a year-over-year home price growth rate of 9.90 percent. Seattle, Washington held third place in year-over-year home price growth with a reading of 8.40 percent.

Las Vegas home prices, while leading the 20-City Home Price Index, remained 20 percent lower than their peak. Nine cities saw home prices decline in September as compared to August; Seattle, Washington posted a negative home price growth reading of -1.30 percent from August to September.

The National Association of Home Builders reported the third consecutive quarterly decline in the number of Americans expecting to buy homes within the next twelve months. As demand for homes declines, home prices are expected to fall as inventories of available homes rise.

These conditions will soften the impact of strong buyer competition and skyrocketing home prices common in recent years, but home prices remain unaffordable in many areas.

Home Buyers Deal with High Home Prices

Home buyers are finding ways to adjust their home searches to get around affordability issues. A recent survey by the National Association of Home Builders indicated 61 percent of home buyers would continue looking for a home they could afford.

40 percent of buyers said they would expand their search areas and 23 percent of responding home buyers said they would look for homes older or smaller than they originally planned to buy.

As always, contact your trusted real estate professional to discuss the latest activity in your local market.

Case-Shiller: Home Prices Hit 11-Month Low in July

by

Case-Shiller Home Prices Hit 11-Month Low in JulyHome price growth slowed to its lowest pace in nearly a year according to the Case-Shiller Home Price Indices. National home price growth averaged 6.00 percent year-over-year as compared to 6.20 percent growth in June.

The 20-city home price index rose 0.10 percent in July to a seasonally adjusted rate of 5.90 percent year-over-year. Slowing home price growth was attributed to buyer fatigue and rising inventories of available homes.

Las Vegas Home Price Growth Tops 20-City Home Price Index

Las Vegas, Nevada topped the 20-City Home Price index with a year-over-year home price growth rate of 13.70 percent. Las Vegas home prices crashed during the recession but continued to recover as the economy improved.Seattle, Washington home prices rose 12.70 percent year-over-year in July; San Francisco, California held third place in the 20-city Home Price Index with year-over-year home price growth of 10.80 percent. Five cities posted higher home price growth rates than in June.

Freddie Mac Predicts Further Slowing In Home Price Growth For 2018 And 2019

Prior to the release of July’s Case-Shiller data, Freddie Mac analysts said that home buyer budget limitations coupled with more homes for sale caused home price growth to slow. Freddie Mac projected home price growth of 5.50 percent for 2018 and 4.50 percent growth in 2019.

FHFA, the agency that oversees Fannie Mae and Freddie Mac, released its home price index for July and reported lower home price growth in July. After posting steady year-over-year growth rates of 6.80 percent for April, May and June, July home price growth dipped to 6.40 percent. Data in home price data reported by FHFA includes homes connected with mortgages held or guaranteed by Fannie Mae And Freddie Mac.

While slower growth in home prices are good news for potential home buyers, rising mortgage rates, strict mortgage credit requirements and competition with cash buyers continue to create headwinds for home buyers who depend on mortgage financing to fund their home purchases.

For the greatest market advantage, be sure to contact your trusted real estate professional if you are interested in buying a new property or considering listing your current property.