Navy Fellas Realty Group

Real Estate, Residential sales and purchase

What’s Ahead For Mortgage Rates This Week -February 3rd, 2020

by

What’s Ahead For Mortgage Rates This Week –February 3rd, 2020Last week’s economic reports included readings on home prices, new and pending home sales and a statement from the Federal Reserve’s Federal Open Market Committee. The University of Michigan issued its monthly statement on consumer sentiment and weekly reports on mortgage rates and first-time jobless claims were also released.

Case-Shiller: Home Price Growth Picks Up in November

According to Case-Shiller’s National Home Price Index for November, home prices rose by 3.50 percent on a seasonally-adjusted annual basis as compared to October’s reading of 3.20 percent. Case-Shiller’s 20-City Home Price Index showed that home prices for cities included in the Index rose 2.60 percent year-over-year. All 20 cities showed growth in home prices on a month-to-month basis.

Cities with top rates of home price growth have shifted from high-cost coastal metro areas to more moderately priced areas inland and in the South. Phoenix, Arizona reported a reading of 5.90 percent growth in home prices year-over-year and has held first place in the 20-City Home Price Index for six consecutive months.

Charlotte, North Carolina held second place with a year-over-year home price gain of 5.20 percent. Tampa, Florida reported a  5.00 percent gain in home prices and held third place in the 20-City Index.

New Home Sales dipped by 3000 sales in December to a rate of 694,000 sales on a seasonally-adjusted annual basis. December sales of new homes fell short of the expected reading of 735,000 sales according to the Census Bureau and U.S. Department of Housing and Urban Development. The seasonally-adjusted inventory of 327,000 new homes available represented a 5.70 months supply of new homes based on the current sales rate.

In related news, the National Association of Realtors® reported fewer pending home sales in December; all regions reported fewer pending sales in December as compared to November. Pending sales in the Northeast were -4.00 percent lower; pending sales in the Midwestern region fell by -3.60 percent and  December’spending sales in the South and West were -5.50 percent and -5.40 percent lower respectively.

The steep drop in pending home sales was attributed to slim inventories of available homes, but fewer buyers make offers on homes during the winter holiday season. Pending sales represent homes for which purchase offers have been received but not closed.

The Federal Open Market Committee of the Federal Reserve unanimously voted to hold the Fed’s benchmark interest rate at a range of 1.50 percent to 1.75 percent. Fed Chair Jerome Powell said that current domestic economic conditions were strong, but he also noted potential unrest in global economies due to factors including the outbreak of a highly contagious Asian flu virus.

Mortgage Rates and New Jobless Claims

Freddie Mac reported lower average mortgage rates last week with the rate for 30-year fixed-rate mortgages nine basis points lower at 3.51 percent. Rates for 15-year fixed-rate mortgages averaged four basis points lower at 3.00 percent; interest rates for 5/1 adjustable rate mortgages were four basis points lower at an average of 3.24 percent. Discount points averaged 0.70 percent for fixed-rate mortgages and 0.30 percent for 5/1 adjustable rate mortgages,

Fewer first-time jobless claims were filed last week; 216,000 new claims were filed as compared to 223,000 claims filed the prior week. The University of Michigan reported that consumer sentiment rose to an index reading of 99.80; analysts expected a reading of 99.10 based on December’s reading of 99.30.

What’s Ahead

This week’s scheduled economic reports include readings on construction spending, public and private-sector job growth and the national unemployment rate. Weekly readings on mortgage rates and new jobless claims will also be released.

FOMC Statement: Key Fed Rate Unchanged; Policymakers Monitor Impact of Asian Flu Outbreak

by

FOMC Statement Key Fed Rate Unchanged; Policymakers Monitor Impact of Asian Flu OutbreakThe Federal Open Market Committee of the Federal Reserve issued its scheduled post-meeting statement Wednesday. Policymakers unanimously decided to leave the target federal funds rate range unchanged at 1.50 to 1.75 percent.

FOMC members reasserted previous views that inflation was “subdued” and the economy was growing at a moderate pace. The Fed typically bases decisions about interest rates on its dual mandate of achieving maximum employment and an annual inflation rate of 2.00 percent.

U.S. Economy Strong, Fed Chair Sees No Immediate Risk From China

FOMC cut the target interest rate range three times in 2019 to offset higher prices associated with a trade war with China, but the Committee considered recent progress in trade negotiations as an indication that there was no current need for further rate cuts. Fed Chair Jerome Powell said he was not concerned about immediate risks from China.

In its current assessment of economic conditions, the Fed cited a strong labor market and job growth but said that business investments and exports were weak. Core inflation readings, which exclude volatile food and fuel sectors, consistently ran below 2.00 percent. The FOMC changed language in its statement to indicate a goal of achieving an inflation rate of 2.00 percent; previous statements referred to an inflation goal of near 2.00 percent.

Committee members will continue to monitor current and developing economic conditions to determine when or if to change the benchmark interest rate range in future meetings.

Fed Chair: Fed Is Monitoring Potential Impact Of Coronavirus Outbreak

Concerns over trade conflicts with China were overshadowed by an outbreak of a strain of Asian influenza in China. The disease, caused by a coronavirus, is extremely contagious and spreads quickly. This could impact global economic conditions as international air travel and shipping may be limited or stopped to prevent further spread of the virus.

Fed Chair Jerome Powell said that although the Fed is not worried about an immediate threat, the FOMC members would continue to monitor how and where the current outbreak of Asian influenza spreads to determine if changes to the Fed’s monetary policy positions are necessary. Tensions in the Middle East were not mentioned in the FOMC statement or Fed Chair Jerome Powell’s post-meeting statement.

 

How To Find Places To Buy Rental Investment Properties

by

How To Find Places To Buy Rental Investment PropertiesReal estate, which is a rental property, has the unique characteristic under the tax code of being able to depreciate it and pretend the asset is going down in value, while, if you are a clever investor, you will acquire property that actually increases in value. Additionally, there are other tax advantages for owning a rental property that can help shelter income.

Positive Cash Flow

The key to success with a real estate investment portfolio of rental properties is to build value while it is self-sustainable. Have the goal of creating positive cash flow from every owned property. Making $100 per month positive cash flow from a single property may not sound like much until you multiply that by 25 properties. A portfolio with those characteristics makes a nice passive income of $2,500 per month or $30,000 per year.

Leverage

Using leverage increases the return on investment (ROI) as long as you choose properties that are cash-positive enough to cover their carrying costs and do not lose value over time. The lower the amount of your money that you invest, the greater the leverage you have and the higher your ROI will be.

Finding Rental Income Property

Commercial rental income property is more challenging so it is best to focus on residential rental properties, especially when starting to build up a real estate portfolio. The things you want to look for when hunting for residential rental properties are a manageable median price for the area, an area that is showing steady annual appreciation in home values, and an area that is stable with no severe negative challenges now or in the foreseeable future.

City Opportunities

It is possible to find properties that are excellent investments in many parts of the United States. Here are some examples of cities that currently have investment opportunities so you can consider them and compare them to your location.

Here are the top ten residential rental markets as ranked by TurboTenant for 2020:

1. Reading, PA

Median Sales Price $140,000 — Annual Increase 11.1% — Average Rent $957

2. District Heights, MD

Median Sales Price $252,000 — Annual Increase 0.4% — Average Rent $1,408

3. Allentown, PA

Median Sales Price $145,000 — Annual Increase 19.0% — Average Rent $1,063

4. East Orange, NJ

Median Sales Price $273,000 — Annual Increase 10.0% — Average Rent $1,534

5. Nashua, NH

Median Sales Price $283,000 — Annual Increase 4.5% — Average Rent $1,524

6. Cincinnati, OH

Median Sales Price $163,000 — Annual Increase 3.1% — Average Rent $1,048

7. Paterson, N.J

Median Sales Price $268,000 — Annual Increase 11.9% — Average Rent $1,614

8. New Castle, DE

Median Sales Price $188,000 — Annual Increase 8% — Average Rent $1,884

9. Rochester, NY

Median Sales Price $136,000 — Annual Increase 5.6% — Average Rent $1,126

10. Hyattsville, MD

Median Sales Price $279,000 — Annual Increase 0.4% — Average Rent $1,982

Summary

It is possible to find cash-flow positive properties in all of these markets, so they are all excellent examples of what to look for when you are hunting for a residential rental property to acquire. Be sure to work with a qualified local REALTOR® who knows the market well that you are considering.

Case-Shiller Reports Growth In Home Prices In November

by

Case-Shiller Reports Growth In Home Prices In NovemberCase-Shiller Home Price Indices reported that national growth of home prices rose by 0.30 percent in November. Analysts said that slim inventories of available homes boosted home prices. Whether or not home price growth continues gaining speed depends on variables including supplies of homes for sale, affordability and home-buyer confidence in the economy.

Mr. Craig Lazzara, managing director and global head of index investment strategy at S&P Dow Jones Indices said, “It is, of course, too soon to say whether this marks an end to the deceleration [of home price growth] or is merely a pause in the longer-term trend.”

Phoenix Holds First Place In Home-Price Growth For 6 Consecutive Months

Case-Shiller’s 20-City Home Price Index showed that all cities tracked reported year-over-year growth in home prices after seasonal adjustments. Phoenix, Arizona held the top position with home price growth of 5.90 percent; Charlotte, North Carolina held second place in the 20-City Index with 5.20 percent growth in home prices and Tampa, Florida held third place with year-over-year home price growth of 5.00 percent.

The Case-Shiller 20-City Home Price Index posted a year-over-year gain of 2.60 percent in November and home prices rose by 0.10 percent in November as compared to October. Case-Shiller reported that home price growth increased by 3.50 percent nationally on a seasonally adjusted annual basis.

Buyers Seeking Affordable Homes Inland

Home-buyers sought less expensive homes in inland states as high-priced homes in coastal regions continued to be unaffordable for many. Slim supplies of homes contributed to bidding wars that drove home prices higher. Analysts said that home prices are set to drop in high-cost markets as the home-buyers move to more affordable markets.

The Federal Housing Finance Agency, which oversees Fannie Mae and Freddie Mac, reported a 4.90 percent gain in November home prices for properties associated with mortgages owned by Fannie Mae and Freddie Mac; this reading was compiled on a seasonally-adjusted annual basis.

FHFA data noted that the Mountain Region reported slower month-to-month growth in home prices in November, but all geographic regions reported positive growth in home prices year-over-year. The Mountain region includes the states of Arizona, Colorado, Idaho, Montana, Nevada, New Mexico, Utah, and Wyoming; these states typically offer a lower cost of living and affordable home prices as compared to high priced coastal areas.

How A Reverse Mortgage Can Help With Long-Term Care

by

How A Reverse Mortgage Can Help With Long-Term CareAnyone who has paid attention to the TV recently has likely seen a lot of commercials for something called a reverse mortgage. For those who might not know, a reverse mortgage is exactly that. In this option, people receive monthly payments from a lender in exchange for equity in their homes. In essence, this functions as an annuity.

One of the major benefits of a reverse mortgage is that it can be used to cover the costs associated with long-term care. Over the next few decades, the number of elderly individuals in the United States is projected to double. For this reason, long-term care is projected to become a major expense.

How Can A Reverse Mortgage Pay For Long-Term Care?

Long-term care is one of the biggest unexpected expenses encountered by the elderly. Often, coinsurance associated with a health insurance policy, combined with the lifetime caps on many policies, can shift significant medical costs to the individual. This leaves many elderly individuals looking for an immediate for some cash. Because many elderly individuals and families are on a fixed income, there are not a lot of options. 

This is where a reverse mortgage can come in handy. Many elderly individuals have paid off their houses entirely. This can act as an immediate source of equity, providing seniors with a much-needed cash infusion to cover the costs associated with long-term care.

Improving On Reverse Mortgages And Long-Term Care

With long-term care expected to become a bigger issue as a larger percentage of the US population reaches retirement, suggestions have been offered to address these costs. One of these suggestions has been to marry long-term care and reverse mortgages with improved social services.

Many experts have been suggesting ways to tie the equity in someone’s home to Medicare and Social Security. This could be used to create a nice safety net that might support seniors by covering the costs of long-term care. Given the stress that an unexpected medical expense can create, this can offer a much-needed respite for seniors and caregivers alike.

Taking Advantage Of A Reverse Mortgage

In the meantime, it is important for seniors to note that a reverse mortgage can offer an immediate cash infusion. This can be used to cover an unexpected cost, such as a medical bill. It will be interesting to see how reverse mortgages evolve in the future.

If you are interested in purchasing a new home or listing your current property, be sure to set up an appointment with your trusted real estate professional.

What’s Ahead For Mortgage Rates This Week – January 27th, 2020

by

What’s Ahead For Mortgage Rates This Week – January 27th, 2020Last week’s economic reporting was slim due to the observance of the Martin Luther King Jr. holiday. The National Association of Realtors® reported on sales of previously owned homes and the Veterans Administration announced changes to its home loan programs. Weekly reports on mortgage rates and initial unemployment claims were also released.

Sales Pace of  Pre-owned Homes Rose 3.60 Percent in December

The sales pace of previously-owned homes jumped by 3.60 percent on a seasonally-adjusted annual basis. December’s sales pace rose to 5.54 million sales. 5.35 million homes were sold on a seasonally-adjusted annual basis in November. Sales of new and pre-owned homes rose 10.60 percent year-over-year.

The number of available homes for sale reached its lowest reading since the National Association of Realtors® started tracking sales in 1999. There was a three-month supply of homes for sale in December as compared to a 3.70 month supply of homes available in  November. Real estate pros typically consider a six-month supply of homes to balance market conditions evenly between buyers and sellers.

December’s data indicates that housing markets are skewed in favor of sellers, which increases challenges for buyers relying on mortgage loans or moderate-income buyers seeking affordable homes.

High demand for homes encourages bidding wars and cash offers that grab sellers’ attention at the expense of traditional purchase offers contingent on mortgage financing. Moderate-income buyers may require additional approvals from mortgage insurance companies or programs geared toward first-time buyers.

Veterans Home Loans: No More Loan Limits in 2020

As of January 1, 2020, VA home loans are no longer subject to loan limits based on property location. Past regulations included home loan limits based on maximum loan amounts determined by the county where a veteran’s prospective home was located.

Removing loan limits streamlines VA loan approval and can avoid problems caused if a VA home loan limit is lower than a home’s appraised value. More veterans are expected to gain the advantage of no down payment required for VA loans. Veterans with less than full VA loan entitlement remain subject to loan limits.

Mortgage Rates, Fall as New Jobless Claims Rise

Freddie Mac reported the lowest average mortgage rates in three months last week. Rates for 30-year fixed-rate mortgages averaged 3.60 percent and were five basis points lower. The average rate for a 15-year fixed-rate mortgage averaged 3.04 percent and was five basis points lower.

5/1 adjustable rate mortgages had an average rate of 3.28 percent, which was 11 basis points lower than in the prior week.

First-time jobless claims rose by 4000 claims to 211,000 new claims filed. Analysts said that the rise in first-time claims did not indicate more layoffs.

What’s Ahead

This week’s scheduled economic reports include Case-Shiller Home Price Indices, new home sales and the Federal Open Market Committee of the Federal Reserve will issue its customary post-meeting statement. Weekly readings on mortgage rates and new jobless claims will also be released.