A note from Brendan Reilly
Greetings! My newsletter covers local and national real estate trends to keep you abreast of current conditions. If you or anyone you know is looking to buy or sell a property in Suburban Philadelphia, I would love to help!
March home sales constrained by tight inventory: Despite slight monthly decline, existing-home sales up 10.3% from a year ago. By Inman News, Monday, April 22, 2013.
"Buyer traffic is 25 percent above a year ago when we were already seeing notable gains in shopping activity," said NAR chief economist Lawrence Yun. "In the same timeframe housing inventories have trended much lower, which is continuing to pressure home prices." Increased construction activity and low mortgage rates are continuing to keep affordability conditions at historically favorable levels, Yun said, but underwriting standards "remain excessively tight," and renters are "getting squeezed" by higher rent. Last month, existing-home inventory edged up 1.6 percent to 1.93 million, representing a supply of 4.7 months at the current rate of sales. The market's current supply of homes is down 16.8 percent from last year, when inventory supply was 6.2 months, NAR said.
The Wall Street Journal recently revealed that two analysts had upgraded their housing market forecasts.
Zelman & Associates: “Ivy Zelman, chief executive of research firm Zelman & Associates, said Wednesday she was now expecting prices to rise by 7% this year, up from earlier estimates of 6%, 5%, and 3%…She’s also calling for a 5% gain next year because she says the supply shortages and growing demand that fueled last year’s turnaround show no signs of easing.“
Her reasons: “The shortage of housing capacity continues to resonate. Just as deflation was a national headwind that stretched deeper into the economy than anyone would have imagined, we believe that appreciation can carry broad, positive implications for the consumer and economy beyond many expectations.”
John Burns Real Estate Consultants: "John Burns, who runs a real-estate consulting firm in Irvine, Calif., is calling for a 9% gain in home prices this year, up from a 5% forecast late last year.”
His reasons: “Strong investor demand and low interest rates that have boosted the purchasing power of buyers.”
So, Where Are Mortgage Rates Headed?
No one can know for sure. The Fed has been artificially holding rates down to stimulate the economy. However, as the economy improves, many experts expect rates to creep up. The Mortgage Bankers Association (MBA) agrees. They were quoted in HousingWire late last year regarding their thoughts on where rates would be headed in 2013.
“After reaching record lows in 2012, mortgage rates are expected to creep up slowly in 2013, the Mortgage Bankers Association predicted.”
In the MBA’s latest Mortgage Finance Forecast they forecast that the 30 year interest rate will be 4.3% by the end of the year. This represents an increase of almost a full percentage point from the 3.4% rate available at the end of 2012. Here is the impact a one percent increase in rate will have on the monthly principal and interest payment on a $200,000 mortgage.
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