Minnesota Homes Today Local & National News

Homebuilder Confidence Rises Again; Tops 40

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HMI September 2010 - 2012Homebuilder confidence continues to make new highs.

As reported by the National Association of Home Builders, the Housing Market Index, a measure of builder confidence, rose to a reading of 40 in September — its highest mark since June 2006.

The index is now higher through five straight months and 11 of the last 12.

For home buyers in Minneapolis/St Paul , the survey may be signaling higher new home prices ahead; when builders are more confident in housing, they’re may be less likely to make concessions in price, and to “sweeten” deals with free upgrades and/or subsidized mortgage rates.

The Housing Market Index is published monthly, based on responses to a 3-question survey that the NAHB sends to its members. The questions cover three distinct parts of a builder’s business, each requiring a simple, one-word answer.

Builders are asked to respond with “Good”, “Fair” or “Poor”; or, “High”, “Average”, “Low” to the following three comments :

  • Rate market conditions for the sale of new homes today
  • Rate market conditions for the sale of new homes 6 months from today
  • Rate the foot traffic of prospective new home buyers

All three survey components showed an increase from August with buyer foot traffic rating at its highest point in more than 6 years. This is especially noteworthy because as the number of prospective buyers increases, so does competition for homes for sale.

There are currently just 142,000 new homes for sale nationwide, the stock of which will “sell out” in 4.6 months at the current pace of sales.

Not since October 2011 has the national home supply been above six months, the consensus dividing line between bull and bear market. Today’s new construction market favors builders and builders know it.

If you’re planning to buy new construction in Minnesota later this year or into early-2013, consider moving up your time frame. Homes may be for sale, but they won’t likely be as inexpensive as they are today. Minnesota Real Estate Today Properties and Market Data

Foreclosures Remain Concentrated In Just A Few States

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Foreclosure concentration August 2012The national market for foreclosed homes remains strong.

According to foreclosure data firm RealtyTrac, foreclosure activity increased 1 percent in August as compared to the month prior, climbing to just above 193,500 units nationwide.

1 in every 681 U.S. households received some form of foreclosure filing last month where a “foreclosure filing” is any one of the following foreclosure-related events : A default notice on a home; a scheduled auction for a home; or, a bank repossession of a home.

Default notices climbed in August which indicates that more U.S. homeowners are falling behind on payments.

However, for the 22nd consecutive month, the number of bank repossessions fell. This suggests that lenders are reaching alternative outcomes to foreclosure more frequently, and with more success, reducing the number of homes for sale nationwide.

Fewer homes for sale is one reason why U.S. home prices have been rising.

Like everything in real estate, though, foreclosures are a local event. In August, just six states accounted for more than half of the country’s bank repossessions. Those six states — California, Florida, Georgia, Illinois, Michigan and Arizona — account for less than 31% of the U.S. population.

Clearly, foreclosures remain concentrated. However, bank-owned homes can still make for “good deals” across all 50 states. This is because foreclosed homes are typically sold at steep discounts versus comparable, non-distressed homes.

Just be sure to do your foreclosure research first.

Buying a home in foreclosure is different from buying a home not in foreclosure. The contract and negotiation phases are different, and foreclosed homes are often sold as-is.

“As-is” is real estate-speak for “this home may be defective and/or uninhabitable”.

Therefore, if you plan to buy foreclosure, talk with a real estate professional first. You can learn a lot about a foreclosure by doing research online. However, when it comes time to write a contract, you’ll want to have an expert on your home-buying team. Search Minnesota Foreclosures

What’s Ahead For Mortgage Rates This Week : September 17, 2012

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Fed Funds Rate 2006-2012Mortgage markets improved last week as the Federal Reserve introduced new economic stimulus. The move trumped bond-harming action from the Eurozone, and a series better-than-expected U.S. economic data.

The 30-year fixed rate mortgage rate dropped last week for most loan types, including for conforming, FHA and VA loans. 15-year fixed rate mortgage rates improved, as well.

Mortgage rates are back near their lowest levels of all-time.

Last week’s main event was the Federal Open Market Committee’s sixth scheduled meeting of 2012. Wall Street expected the Fed to launch a third round of quantitative easing (QE3) after its meeting and the nation’s central banker did not disappoint.

It launched QE3 and did so with such scale that even Wall Street was shocked.

The Federal Reserve announced a plan to purchase $40 billion monthly of mortgage-backed bonds indefinitely, a move aimed at lowering U.S. mortgage rates in order to stimulate the housing market which can create more jobs in construction and other related industries.

The Fed will continue to buy mortgage bonds until it deems such purchases no longer necessary. The Fed also announced a commitment to holding the Fed Funds Rate in its current target range of 0.000-0.250% until mid-2015, at least.

Mortgage rates responded favorably to the stimulus, falling to their lowest levels of the week. It masked a rise in rates from earlier in the week tied to the German court’s clearing of the European Stability Mechanism — the Eurozone “bailout fund”.

The action clears the way for debt-burdened nations including Spain and Greece to get the support necessary to remain solvent.

Mortgage rates were also pressured higher by a strong consumer confidence report. When consumers are more confident in the economy, they may be more likely to spend and consumer spending accounts for more than two-thirds of the U.S. economy.

This week, mortgage rates throughout Minnesota face competing pressures. The Fed’s bond-buy has started and that will lead rates lower, but with Housing Starts and Existing Home Sales data set for release, data could pull rates up.

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