In the first quarter of 2017, nearly half of refinance borrowers took cash out, up from 44 percent in the fourth quarter of 2016, according to Freddie Mac. This is the highest share since the fourth quarter of 2008, but still below the peak of 89 percent in the third quarter of 2006.
Rising home prices have helped increase the number of homeowners who now have equity in their homes. As such, more owners are finding they can refinance to get a lower mortgage rate and also take out some cash for other uses. In hot markets like Denver and Dallas, in which home prices have surged by some of the highest amounts in the country, more than half of refinancers opted to refinance for cash last year, according to Freddie Mac.
“Despite weak economic growth, housing got off to a good start in 2017 because low mortgage rates have given the spring homebuying season a pleasant surprise. Mortgage rates started March just above four percent and have mostly drifted lower since then, even falling below 4 percent. With home sales, housing starts and home values up, 2017 is shaping up to be the best year for housing in over a decade,” said Sean Becketti, Freddie Mac’s chief economist.
Report Finds California Home Ownership Rates at Lowest Since 1940’s
A draft report from California’s Department of Housing and Community Development found home ownership rates in the state are at their lowest since the 1940’s.
The report, “California’s Housing Future: Challenges and Opportunities,” also found that the state has more than its share of the country’s homeless population — 22% of the country’s homeless live in the state while the state makes up only 12% of the country’s population. Listen to the Podcast here
SANTA CLARA COUNTY MARKET
The Single Family Median Home Sale Price in December of $965,000 is a decrease of 4.4% over the previous month. Days on Market stayed the same at 19 in December and Months of Inventory decreased from 1.1 months to 21 days. New homes listed dropped 51% in December.
SANTA CRUZ COUNTY HOME PRICES
The Single Family Median Home Sale Price in December of $805,000 is an increase of 12.4% over the previous month. Days on Market increased from 25 to 31 in December and Months of Inventory decreased from 2.2 to 1.7 months. New homes listed declined 30% in December.
CA Median Home Price for November 2016
Calif. highest median home price by region/county: San Francisco: $1,360,500
Calif. lowest median home price by region/county: Siskiyou: $183,000
Calif. Traditional Housing Affordability Index:
Third Quarter 2016: 31 percent
Homeowners looking for some guidance on what is happening in the Bay Area housing market may be struggling to find consistency. Depending on the area they are looking to buy in the information available can vary block by block, city by city.
Uncertainty about market conditions was reflected in C.A.R.’s August Market Pulse Survey, with most leading indicators showing a decline in growth and REALTORS® becoming less optimistic about market expectations and more concerned with reduced affordability.
For the Bay Area as a whole, C.A.R. states the pending sales rose 8.5% from August 2015 and 4.1% from July. A strong 14.8% increase in pending sales in Santa Clara County drove the improvement in the Bay Area, as well as double-digit pending sales gains in San Francisco (10.4%) and San Mateo (11.9%) counties.
Let’s get specific:
In Santa Clara County days on the market in August averaged 29, with the list to sales price ratio at 101.4%. The homes for sale amounted to 1,464 while actual sales were 924. The median price in Aug 2015 was $967.4K and in Aug 2016 $977.5K for single family homes.
In Santa Cruz County days on the market in August averaged 43, with the list to sales price ratio at 100%. The homes for sale amounted to 423 while actual sales were 201. The median price in Aug 2015 was $715K and in Aug 2016 $824K for single family homes.
California home sales stumbled in July as low inventories and eroding affordability dragged down the housing market, according to the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.). Closed sales of existing, single-family homes in California totaled a seasonally adjusted annualized rate of 415,840 units in July, according to info collected from more than 90 local REALTOR® associations & MLS’s.
Making sense of the story
The July figure was down 4.1 percent from the revised 433,600 level in June and down 5.1 percent compared with home sales in July 2015 of a revised 438,230. Home sales remained above the 400,000 pace for the fourth straight month, but sales have declined year over year for the fifth consecutive month.
“Despite the tight housing supply conditions that have persisted over the past few years, home sales have stayed relatively solid,” said C.A.R. President Pat “Ziggy” Zicarelli. “Even with a shortage of homes on the market, low rates and strong demand have been the norm. Some regions, such as the Bay Area, are seeing an uptick in inventory as high prices are motivating sellers to list their properties for sale. While this could ease the inventory somewhat, supply remains tight, and low affordability is expected to be an issue in the short term.”
The statewide median price remained above the $500,000 mark for the fourth straight month, but there are signs of an expected slowing in price growth. The median price of an existing, single-family detached California home slipped 1.8 percent in July to $509,830 from $519,410 in June. July’s median price increased 3.9 percent from the revised $490,780 recorded in July 2015. The median sales price is the point at which half of homes sold for more and half sold for less; it is influenced by the types of homes selling as well as a general change in values. More homes being sold at the high end of the market (over $1 million) and slightly fewer sales at the lower end (under $300,000) contributed to the year-over-year gain in the median price.
The share of Americans who own their own homes dropped to the lowest rate since 1965 and well below its peak of 69.2 percent in June 2004, according to the U.S. Census Bureau. This rate was lower than the second quarter 2015 rate of 63.4 percent and lower than the 63.5 percent rate in the first quarter 2016,
By race, the homeownership rate for the second quarter 2016 for non-Hispanic white households was the highest at 71.5 percent. The homeownership rate for Asian or Native Hawaiian and Pacific Islander households was 53.7 percent and 41.7 percent for blacks.
Approximately 87.3 percent of the housing units in the United States in the second quarter 2016 were occupied and 12.7 percent were vacant. Owner-occupied housing units made up 54.9 percent of total housing units, while renter-occupied units made up 32.4 percent of the inventory in the second quarter 2016.
To read the entir report, visit this site more info.
Britain’s vote to exit the European Union will likely have a long-term impact on the world economy, according to an article in REALTOR magazine.
“Demand for U.S. real estate could rise,” says NAR Chief Economist Lawrence Yun. While a rise in the dollar could hurt U.S. exports, it’s also expected to put downward pressure on long-term mortgage interest rates. “Mortgage rates will tumble,” says Greg McBride, chief financial analyst at Bankrate.com, “possibly hitting new record lows. If you’re a borrower, don’t wait to lock in your rate, as this opportunity may not last long.”
Steve Rick, chief economist at CUNA Mutual Group, was quoted in a Bankrate.com article saying a further drop in mortgage interest rates could give new life to home-mortgage refinancing, which started to cool early this year after several years of big growth.
There are about 850,000 homes with equity lines that were taken out in 2005, and 1.25 million each for 2006 and 2007, totaling about $192 billion in all.
HELOCs taken out in 2005, 2006, and 2007 make up 52% of all active lines of credit, suggesting delinquencies could remain elevated for some time, as reported by data provider Black Knight.
HELOCs come with 10-year grace periods, so 2015 marked 10 years after the frothiest borrowings. In March, delinquencies were up 87% compared to a year ago among 2005 second lien HELOCs – those that stand behind a mortgage on the property – data provider Black Knight said Monday.
In some ways, the housing market has recovered: sales of new and previously-owned homes rebounded to 6 million in April, the first time above that benchmark since the downturn. In some metro areas, prices have topped earlier highs.
But there are still signs of a housing hangover. Nationally, prices remain below the 2006 high by double digits, housing starts haven’t picked up enough to satisfy demand, and nearly 7 million homeowners are still underwater.
Buying a vacation home is a bit like getting married: After enjoying the destination as a casual visitor, it’s time to make a long-term commitment and settle down. Choosing where to buy depends largely on where you live, what you can afford, and whether or not you will rent out the property when you’re not using it.
2. Can you afford to buy a second home?
Crunching the numbers is a crucial first step for anyone who’s thinking about buying a second home. Otherwise, that dream vacation getaway could become your worst financial nightmare. David Hehman, CEO of EscapeHomes.com, advises buyers to look beyond the sale price to calculate the true cost of ownership.
3. Is it a smart investment?
Recent figures from the National Association of Realtors show an upward trend in the number of second homes purchased for investment purposes, with rental properties outnumbering vacation homes by a wide margin. Property values do fluctuate, of course, but according to Tom Kelly, co-author of How a Second Home Can Be Your Best Investment (McGraw-Hill), sinking a portion of your net worth into residential real estate can be a great way to diversify your portfolio.
4. How will a second home affect your taxes?
Just like your primary home, a vacation home is likely to have a major impact when April 15 rolls around. According to the National Association of Tax Professionals (NATP), mortgage interest and property taxes on first and second homes alike may be claimed as Schedule A deductions, but to avoid unfriendly encounters with the IRS, buyers should be aware of some important differences in the way second homes are taxed.
5. Are time shares or joint ownership good options?
A history of pushy sales tactics and shady deals has given time shares a bad reputation in the past, but lately the industry has made a concerted effort to turn over a new leaf.
The two most important housing market trends to watch in 2016, according to Alex Villacorta, chief economist at Clear Capital, will be the continued growth of rental rates and the moderating trend in home prices.
Demand for resale housing will grow and will continue to be dominated by older millennials, aged 25 to 34, according to Jonathan Smoke, chief economist at realtor.com.
Lots of discussion of the need for subsidy but the real problem is lack of income growth for low and moderate income households, as stated by Douglas Duncan, chief economist, Fannie Mae:
Matthew Gardner, chief economist at Windermere believes we will see more homes for sale. Homeowner equity started to recover in 2013 and has been steadily improving since that time.
Mark Zandi, chief economist of Analytics says the most important housing market trend in 2016 will be the developing housing shortage. New housing construction has picked up in recent years, but it remains well below that needed to meet demand from newly formed households, second home buyers, and obsolescence of the existing stock of homes.
Wage growth will be the key new ingredient for the housing recovery states Peter Muoio, chief economist, Ten-X.