Tuesday, April 15, 2014
Despite some concern about fluctuation in mortgage rates, economic activity indicators are lining up for a surge of real estate activity. "Growth is expected to pick up in the second quarter and build throughout the summer, firming to approximately 2.7 percent for all of 2014," reports Pete Bakel of Fannie Mae, a government-controlled company that helps provide money for the U.S. housing market.
Bakel adds, "The return of weather to seasonal norms should help boost growth in the second quarter, supported by consumer spending, business investment and housing starts.”
Zillow notes that rates for 30-year fixed mortgages fell the last week in March, with the current rate borrowers quoted on Zillow Mortgage Marketplace standing at 4.25 percent, down from 4.27 percent the previous week. At this time in 2013, according to Bankrate Inc., the rate was about 3.57 percent. Polyana da Costa, writing for Bankrate.com, notes that mortgage rates could jump higher if an upcoming employment report shows a stronger labor market.
Experts at LendingTree see similar variability in mortage rates. Writing on the lender's blog during the second week in April, Gina Pogol notes that corporate earnings reports could drive stock prices significantly higher or lower and affect mortgage rates. "It could be a roller-coaster week for mortgage rates, so if you're floating an interest rate, keep your loan officer on speed dial," Pogol advises.
How high will the rate go and how will it affect buyer inclination to sign on the bottom line? Da Costa notes that the last time the fixed rate was in the 6 percent range was back in November 2008. Although the rate will "eventually get there," she says, that probably won't happen this year.
So overall, U.S. consumers emerging from hibernation basically want to buy everything — including homes. And when house hunters search online for homes, they'll find fewer easy-picking foreclosures.
"The stock of seriously delinquent homes and the foreclosure rate are back to levels last seen in the first quarter of 2008," says Anand Nallathambi, president and CEO of CoreLogic, which tracks real estate and businesses trends. "The shadow inventory (foreclosed or delinquent homes kept off the market) has also declined year over year for the past three years as the housing market continues to heal, including double-digit declines for the past 16 consecutive months."
About 752,000 U.S. homes were in some stage of foreclosure as of February 2014, compared to 1.2 million in February 2013, a decrease of 35 percent, CoreLogic notes.
Eddie Tyner, general manager of ForSaleByOwner.com, one of several online services that help sellers bypass real estate agents and their 6 percent commissions, agrees with that assessment.
"Now is a great time to sell a house because there's little to no inventory," Tyner says. "If you have a good house, there are a lot of buyers out there for it — and not enough houses on the market for them to choose from."
This situation isn't going to last forever, Tyner warns. "At some time in the next year, there will be a lot more inventory because (homeowners) will realize there are a lot of buyers out there, and home prices will probably begin to increase, too. It's a better time to sell now than in six months."
The real estate market is always in motion, but for the moment, sellers are in the driver's seat. If you're prepared to sell, testing the market with a for sale by owner (FSBO) listing could result in a quick home sale.