Austin Real Estate Blog

After a year of sluggish sales, Austin saw a large jump in November '09.

A last-minute scramble to take advantage of tax credits and low interest rates is credited with a 58% increase in Austin home sales in November 2009 over the same period last year. The increase in sales is the largest in over a decade, and offers hope for recovery in the beleaguered residential real estate market. While overall home prices in Austin continue to fall, the decrease has begun to level off and seems to be reaching a state of equilibrium, allowing anxious sellers a well-deserved sigh of relief.

Analysts point to the recently extended First-Time Homebuyer Credit and interest rates that have dipped below five percent as the primary causes for this significant increase in sales. Additionally, while median home prices in Austin have not fallen as sharply as some experts had predicted, appreciable reductions in the asking prices of many homes have led to a surge in bargain-hunting by home buyers who might otherwise be priced out of the market. The median price of a single-family residence in Austin has decreased only two percent over the past year, demonstrating the resiliency and stability of the housing market in the metropolitan area.

Most real estate experts are cautiously optimistic about Austin’s residential real estate market going into 2010. Sales are expected to continue to grow more slowly, with no repeat of November’s record-setting figures. The expansion of the federal tax credit for first-time home buyers and continued low interest rates will likely continue to attract buyers to the market, especially in entry-level communities. However, as the economy begins to rebound, interest rates are expected to return to over five percent, and home sales will slow as a result.

As consumer confidence improves, economic conditions in Austin and throughout Texas are expected to continue to rebound, providing employment opportunities and spurring additional sales of new and existing homes. Home prices are expected to increase as well in correlation with the anticipated growth in demand. With ultra-low interest rates, federal incentives, and the current undervaluing of homes on the market, most real estate advisors believe that now is the time to invest in residential real estate, before interest rates and values return to higher levels later in 2010.

What Did Interest Rates Do This Week?
** based on Freddie Mac weekly average survey **

30-yr Fixed – Lower
This Week:  4.78% (lowest since April 30, 2009)
Last Week:  4.83%
1yr Ago:  5.97%

15-yr Fixed – Slightly Lower
This Week:  4.29% (record low)
Last Week:  4.32%
1yr Ago:  5.74%

Jumbo Fixed (Average 30-yr Fixed)
Last Week:  5.75%Previous Week:  5.75%

Highlight of This Week’s Major Economic Reports

Despite the nation’s economic challenges, there’s a lot to be thankful for this year.  For one, the housing market has started to see stabilization – thanks in combination to historic low interest rates and increasing affordability.  Then, there’s the first-time buyer tax credit, which was set to expire on December 1^st and has since been extended to April 30^th.  The original expiration helped to prop up home sales in October, which saw the fastest sales pace since October 2007, with existing home sales jumping over 10% and new home sales spiking 6.2% from September’s figures.

What to Look for Next Week

The latest unemployment picture will be framed with the release of November’s employment report.  Even though unemployment claims have slowly dropped in recent weeks, it’s expected we’ll see a rise in the 10% unemployment rate through the end of the year.

Short-Term Rate Outlook
Relatively Unchanged

Stay Informed:  What’s in the News

“America’s Fastest Recovering Cities” – Austin #3 from Forbes.com

http://www.forbes.com/2009/11/19/cities-recovery-unemployment-lifestyle-real-estate-top-ten_print.html

“Texas’s Existing Home Sales Climb, Prices Inch Up” from Texas A&M Real Estate Center

A total of 19,347 existing single-family homes were sold in Texas last month, a 15 percent increase from October 2008, according to MLS data compiled by the Real Estate Center at Texas A&M University.

The median price rose 1 percent to $143,300 during the same period, and the state finished the month with a 6.9-month inventory of existing homes.

Here is how select Texas cities fared in October (data current as of Nov. 24, 2009):

“US Job Losses to Bottom out Next Quarter: NABE” from CNBC.com

Economists expect the joblessness that has weighed down the nation’s economic recovery will start to slowly abate in 2010, but they predict consumers will continue to keep a tight rein on spending, according to a new survey.

“Fed Remains Cautious on Strength of Recovery” from The New York Times

The Federal Reserve’s new economic forecast and minutes from a session earlier this month reveal that policymakers continue to fret over whether the economy is strong enough to hold up without government stimulus efforts, such as the temporary fiscal programs for the housing sector. Concern about the recovery comes as Fed officials begin debates on when to start raising interest rates, which have been held at virtually zero since last December, and on ending their program to purchase $1.25 trillion in mortgage-related securities. The real estate industry fears an increase in mortgage rates, but the Fed also wants to focus on reducing its holdings and bringing its balance sheet back to normal.

Marie Funston | Sr. Mortgage Advisor | (512) 750-7270
9442 N Capital of Texas Hwy., Suite 1-600
Austin, TX 78759
Fax:  (512) 343-1224
Marie@austinmortgageadvisor.com

Reports suggest that the real estate market is gradually recovering but at a snail’s pace. There are frequent upheavals and this is evident from the RECI or the Real Estate Confidence Index which keeps track of views and opinions of real estate agents as well as brokers and their “forward-looking” sentiment of United States’ real estate market which recorded 5.59 in October as compared to 5.83 in September. As rates are still low, home refinance is an option that majority of the homeowners are turning to. Some are also taking help of loan modification.

Home refinance may be for you

It was observed that properties that ranged in between the low and mid priced ranges kept the real estate as well as the mortgage market active. The mortgage market which is still volatile is yet to recover fully and statistics suggest that about 6.7 million households in the US having mortgages have fallen behind on payments (as per MBA or Mortgage Bankers Association). Every homeowner is striving hard to become current with their payments again so that they don’t lose their home in foreclosure.

One of the best ways to save your home from being foreclosed is to opt for home refinance and that is what majority of the homeowners are doing if it is an appropriate choice for them. What do you mean by an appropriate choice? There are many factors that decide whether or not the time is ripe to opt for home refinance.

When should you refinance your mortgage?

Some of the factors that help you to decide whether you should refinance your mortgage are as follows –

Opt for home refinance when rates are low

Low rates can drive you to opt for home refinance. This is what majority of the homeowners do. This can make your mortgage payments affordable.

Weigh the short term and long term benefits

Find out how refinancing your home will affect your long term as well as short term financial goals.

Do you want lower monthly payments and reduced interest rates?

Home refinancing will allow you to enjoy lower payments and reduced interest rates.

Do you want to switch from adjustable-rate mortgage to fixed-rate mortgage?

Often it is seen that homeowners refinance if they are currently making payments as per adjustable-rate mortgage but want to switch to fixed-rate mortgage that makes their payments predictable. This is advantageous as you can plan out your finances well in advance.

Are you looking forward for some extra cash?

If you have enough equity in your property, you can opt for home refinance to get access to some extra cash that can be used for meeting your other financial obligations.

Build up equity in your property

Home refinance is also a good option if you want to shorten the length of the loan term. Homeowners usually do so in order to pay off mortgage faster so that they can build equity in the property faster.

If you are planning to refinance your mortgage, do so only if it is beneficial for you. It is important that you don’t opt for home refinance only if one of the factors mentioned above match your requirements. This is because whether you refinance your mortgage or take out mortgage for the first time, you are putting your home at stake.

Guest Blogger: Peter Gomes

As companies downsize their budgets, commercial loans have defaulted by more than double over the last year. It is currently at 7% which is double the default rate from the previous year, but that does not stop there, the rate increases will harm small and regional sized banks. As the commercial side of mortgage loans defaults, the smaller banks find larger gaps to fill. Today it is nearly impossible to obtain a new commercial loan.

New construction options have been limited by lack of funding and many businesses are foregoing the commercial ownership prospects. This creates other options. For many businesses who are not ready to buy have options to rent, and finding a prime location that is available in their budget. This enables expansion options, even in an otherwise difficult market.

For companies who are ready to buy, with minimal or no loan, this is the time to do it. There will be no better time to find a deal on a commercial property, and there is no better city than Austin. Contact Joe Cline today to get started finding the best location for your business and budget.

This message is to alert you to changes in the federal Truth-in-Lending Act regulations, which will have an impact to every mortgage provider.  It will require a fundamental change to how we finalize loan terms for the borrower prior to closing. Changes at the closing table could require the borrower to reschedule the closing date if a revised Truth-In-Lending (TIL) is needed.

The rules for the Mortgage Disclosure Improvement Act were finalized Friday, May 8^th, and it is applicable to all mortgage lenders (federally chartered or state licensed).  For applications taken as of July 30, 2009, new requirements about the delivery and the accuracy of disclosures will apply.  One of the new requirements is that the borrower must be provided with an accurate APR disclosure at least three business days prior to closing.

Remember the new rule with “3/7/3”

3 days after application – An initial Truth-In-Lending (TIL) statement must be provided no later than 3 business days after receipt of the loan application.  Our current process generates an auto-compliance package that complies with this requirement, so no changes are needed.

7 business days after initial application – Waiting period – the borrower is not permitted to close until at least seven business days have passed since the TIL was placed in the mail or provided to the borrower.

3 business days prior to closing – Waiting period – the borrower must receive an accurate APR on their TIL at least 3 business days prior to closing. If it was provided before that period of time, because the loan terms were locked in earlier in the process, no new TIL is required if there is no change to the APR or the change is less than 1/8th of a percent.

If the final loan terms cause the TIL / APR to be understated by more than 1/8th of a percent, a revised TIL with an accurate APR must be provided to the borrower so that they receive it at least three business days prior to closing. It must be in their hands at that time, and they may close on the 3rd business day after that day.

What this means to you? All Realtors and buyers need to be advised of these new timing requirements, which will limit rush closings and could even delay closings.

Thirty-year mortgage rates fell to 4.78% last Friday, hitting their lowest level since Freddie Mac started tracking rates in 1970.One-year Adjustable Rate Mortgages (ARMs) were almost the same, at 4.77%.

Under the American Recovery and Reinvestment Act of 2009, approximately $10 billion in purchase funds are now available for the Rural Development Single Family Housing Guaranteed Loan Program (SFHGLP).

Beginning Friday, March 27, 2009, the Rural Development program will be re-activated!

Here’s a glimpse of what USDA can offer:

• 102% loan-to-value – this means $0 down + roll in closing costs
• Up to $417K purchase price
• No PMI
• Condos and manufactured homes allowed
• No reserves required
• Up to 6% seller contribution towards closing costs

Too good to be true?  Here’s the catch:

• Income limitations
• Geographic limitations
• Minimum 580 credit score required

Find out if your property or income qualifies.  Check out  http://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do;jsessionid=3A9FDD1B237583EA9EE02934281E8C7A

OR … call me for more information!

Marie Funston
Senior Mortgage Advisor
Cell:  (512) 750-7270
Office:  (512) 691-6757
Fax:  (512) 343-1224

HUD has just announced the new (old) FHA loan limits:

SFR/Condos – $288,750

2-units – $369,650

3-units – $446,800

4-units – $555,300

This essentially takes us back to last year’s loan limits!

Conventional conforming limits stay the same at $417,000.

FHA is expected to account for almost 40% of all loans originated this year.  If you have any questions on FHA contract, guidelines, etc., just give me a call!

Marie Funston

Senior Mortgage Advisor

Cell:  (512) 750-7270

Office:  (512) 691-6757

Fax:  (512) 343-1224

What Did Interest Rates Do Last Week?

** according to Freddie Mac **

 30-yr Fixed – Lower

Last Week:  4.96% — lowest since 1971

Previous Week:  5.01%

1yr Ago:  5.69%

15-yr Fixed – Slightly Higher

Last Week:  4.65%

Previous Week:  4.62%

1yr Ago:  5.21%

5/1 ARM – Lower

Last Week:  5.25%

Previous Week:  5.49% 

1yr Ago:  5.40%

Highlight of Last Week’s Major Economic Reports

According to Freddie Mac, “Interest rates for 30-year fixed rate mortgages fell for the 11th straight week to another record low, due in part to the slowing economy and government actions.  So far, both the U.S. Treasury Department and the Federal Reserve have added over $100 billion in liquidity to the mortgage market since September 2008, which put downward pressure on interest rates for fixed-rate mortgages.  The Federal Reserve may add up to an additional $570 billion more this year, based on its November 25, 2008, announcement, to further shore up mortgage lending and keep rates low.”

On the economic news front, Retail Sales ended up being much worse than the already ‘horrible’ expectations for December.  Prices are falling all around, but fortunately we’re not in deflationary territory – at least not yet.  In December, producer prices dropped 1.9%, while consumers’ costs eased by 0.7%. 

What to Look for This Week

The economic calendar is very light this week, so expect the stock market to drive the direction of mortgage rates.  We’ve got the inauguration on tap, and that should generate some buzz with investors.

Short-Term Rate Outlook

Stable

What Did Interest Rates Do This Week?

** according to Freddie Mac **

30-yr Fixed – Lower

This Week:  5.01% — lowest since 1971

Last Week:  5.10%

1yr Ago:  5.87%

15-yr Fixed – Lower

This Week:  4.62%

Last Week:  4.83%

1yr Ago:  5.43%

5/1 ARM – Lower

This Week:  5.49%

Last Week:  5.57%

1yr Ago:  5.63%

Highlight of This Week’s Major Economic Reports

Despite a recent uptick in Treasury yields, mortgage rates actually fell during the first full week of the New Year.  One major catalyst driving this dip is the start of the Fed’s foray in purchasing mortgage-backed securities.  The $500 billion budgeted for this shopping spree is helping to increase demand, which in turn has kept rates low.

Stocks also took a hit throughout the week as retailers and other corporations took turns issuing earnings warnings.  This then led to a ‘flight to quality’ mad-rush over to the bonds markets, thereby further driving down rates.

And, lastly, there was the much-anticipated Employment Report.  We knew it wasn’t going to be pretty.  524,000 jobs lost in December, which brought the final 2008 tally to 2.6 million.  The unemployment rate now sits at a level we haven’t seen in 16 years – 7.2%.  Despite the gloomy outlook for the job market, most economists do not anticipate the unemployment rate to hit double-digit levels, since the economy (i.e., GDP) is expected to make a comeback (albeit a modest one) in the second half of the year.

What to Look for Next Week

We’ll get to find out just how bad the worst holiday shopping season in years was when the latest Retail Sales figures come out on Wednesday.  Then, of course, there are the all-important inflation gauges in the Consumer Price and Producer Price Indexes.  Inflation is not expected to be an issue at all; it’s more so seeing if the numbers start to creep into deflationary territory, as many economists fear.

Short-Term Rate Outlook

Fractionally Lower

Marie Funston

Senior Mortgage Advisor | Cell:  (512) 750-7270