Mortgage Rates Projected to Rise as Tapering Continues

Courtesy of the KMC Crew at Keeping Current Matters
2/18/14

It is projected that if the Fed continues to cut back on bond purchases that long term mortgage rates would start to climb. Many experts felt that Janet Yellen, who replaced Ben Bernanke as Fed Chair, was going to be less inclined to continue tapering bond purchases at the level established.

However, in her testimony in front of the Financial Services Committee last week, Yellen made it quite clear that she will in fact continue the current pace of tapering:

“In December, the Committee judged that the cumulative progress toward maximum employment and the improvement in the outlook for labor market conditions warranted a modest reduction in the pace of purchases, from $45 billion to $40 billion per month of longer-term Treasury securities and from $40 billion to $35 billion per month of agency mortgage-backed securities. At its January meeting, the Committee decided to make additional reductions of the same magnitude. If incoming information broadly supports the Committee's expectation of ongoing improvement in labor market conditions and inflation moving back toward its longer-run objective, the Committee will likely reduce the pace of asset purchases in further measured steps at future meetings.”
 
What does that mean to a prospective purchaser? Currently, Freddie Mac’s 30 year rate is at 4.28%. Here are the projected interest rates for this time next year:

Baby, it's cold outside!

Courtesy of my friend Jon Boda in PA

Courtesy of my NJ family... Marge & David Rivchin

Let me begin by saying, I LOVE snow!  Unfortunately, I hate cold!  As I watch the weather reports each day and live vicariously through my friends and family on the east coast, I long to see some snow up close and personal.  But, as a transplanted east coast gal, I do remember the hardships that come with a massive snowstorm and I really don't miss that part.  Each day I see many of my friends on Facebook say they've had enough.  They want to know when the Polar Vortex will end.  Well, hopefully, it will end soon... but, in the meantime, please be careful out there!  And, as you contemplate your options, know that we're shoveling sunshine here in the desert!  Would you like some of my business cards to share with your friends?

Infographic courtesy of The KMC Blog:

Has the Phoenix housing market finally balanced out? 2014 could provide the answer

Source:  Phoenix Business Journal
Article by Kristena Hansen
2/14/14

When it comes to home prices, supply and demand, the pendulum has been swinging from one extreme to the other in Phoenix since the housing boom of a decade ago.  The metro Phoenix housing market went from a pre-recession sellers’ market to a buyers’ market amid the foreclosure crisis. Then it went back in the sellers’ favor again these past two years when inventory levels and interest rates were at all-time lows.
 
The metro Phoenix housing market went from a pre-recession sellers’ market to a buyers’ market amid the foreclosure crisis. Then it went back in the sellers’ favor again these past two years when inventory levels and interest rates were at all-time lows.

 During these shifts, the Valley saw prices peak, plunge to record lows and then, finally, pick up the pace again at a staggering rate in recent years.  

But now in 2014, the pendulum could swing yet again. 

Despite the fact that there were 36 percent more homes on the market Valleywide in December than a year earlier — thanks to double-digit boosts in home prices all last year that pulled many homeowners out of negative equity — demand has continued to fizzle since July. That’s according to the latest Arizona State University housing report released today.

In fact, single-family home sales were down 17 percent year-over-year, the report said. Even with a 12 percent increase in listings priced below $150,000 — where the supply shortage had been most severe and demand highest — sales in that range plunged by a whopping 47 percent.

For buyers, this has meant more to choose from and less competition. But for sellers, it means fewer showings, longer wait times for offers to show up — and cutting prices.

The median Phoenix-area single-family home price in December stood at $205,000 — up a sharp 25 percent year-over-year, but only a 2.5 percent increase from November.

“We have been through enormous turbulence since 2002 and it will be a relief for many to be operating in a more balanced market,” Michael Orr, the report’s author and housing expert at ASU’s W.P. Carey School of Business, said in the report. “However, if the current cooling trend that started in July continues for much longer, 2014 could easily see average and median home prices move a little lower than they were at the end of 2013.”

...Orr noted that the Phoenix luxury market — homes priced above $500,000 — is the only sector that hasn’t seen this slowdown. Luxury sales in December were up 21 percent year-over-year as access to jumbo loans is much more accessible than lower-end financing, and will stay that way should the stock market continue performing well.

For the complete article, click HERE.