Hat tip to daytrip for sending this in from cnbc.com:
The sharp rise in home prices in 2013 caused two conflicting results: The return of positive home equity for hundreds of thousands of borrowers and considerably weaker affordability for an equally large pool of potential homebuyers.
While positive equity allows more borrowers to move, weaker affordability keeps them in place. So which will be the greater driver of housing this spring?
“There’s going to be a reality check in the spring in terms of realizing that what we saw in 2013 is not a real market,” said Daren Blomquist of RealtyTrac, a real estate sales and data website. “It’s a nice bounce-back market, but ultimately you need the biggest pool of potential homebuyers out there to be able to afford those homes.”
In an analysis of housing affordability, RealtyTrac found that the estimated monthly house payment for a median-priced, three-bedroom home purchased at the end of 2013 was a whopping 21 percent higher than it was at the end of 2012 in more than 300 U.S. counties. That includes mortgage, insurance, taxes, maintenance and the subtracted income tax benefit.
The rise is the result of higher home prices and higher mortgage rates. RealtyTrac used a 30-year fixed-rate mortgage with an interest rate of 4.46 percent and a 20 percent down payment. That is versus a 3.35 percent interest rate the previous year.
Some metro regions, especially in California and parts of Michigan, saw monthly house payments rise about 50 percent from a year ago.
Read full article here:
http://www.cnbc.com/id/101431244
Using the same calcs, the difference was closer to 30% higher around NSDCC.
I also wonder if higher mortgage rates will discourage both move-up buyers and relocation for better job opportunities.
Everyone with equity refinanced under 4% last year. That’s a sweet deal, and tough to give up.
I think it’s in the builders hands for the most part.
Unless you got to got to sell, the only reason you are on the market is to get that price.
On the other hand, where in the heck did they get 3.35%?
The Mortgage Bankers Index bottomed out around 3.6%.
Do you know anyone who got 3.35% on a 30-year fixed?
where in the heck did they get 3.35%?
RealtyTrac has always been fast and loose with the facts – but if they took it off the Freddie Mac chart, it was 3.35% for November and December, 2012: http://www.freddiemac.com/pmms/pmms30.htm
Did you hear in the video that she called RealtyTrac a “online sales and analytic company”?
Ah, the Freddie numbers are if you paid 0.7 points.
How many people in the real world paid 0.7 points? Most people I know want to do no-cost refis.
True, and their example is just illuminating the gap. They used the same 0.7-point rate on the high end too.
If you like a little doomer with your coffee in the morning, the Doctor has many good points here:
http://www.doctorhousingbubble.com/renter-nation-american-renting-households-rental-investors/
On the decline of mortgage applications:
“purchase applications are essentially back to where they were 20 years ago. The difference? We’ve added 54,000,000 people since then.”
At the lows, we did one 30 year fixed loan at 3.2% – no points and no costs, a handful at 3.25% no points no costs and many at 3.375% no points and no costs.
Not all mortgage brokers earn 2+ points on a loan. Shop around or as Jim says get good help!
We also refinanced somewhere below 3.5 Fixed (don’t have the specific’s in front of me)
But like WC was saying, it going to take a powerful reason to walk away from that.
Only (Got to Got to sell) or price is going to get you there.
I got 3.125 % 30 yr fixed on cash out with no costs and no points from aimloan.com. Closed in late December 2012. Loan was just under $417,000. If I waited another day before locking I could have had 3% flat. I have a friend that got same rate on a jumbo with low LTV no cash out, no costs and no points around the same time. Some people were in the position to do so and caught the bottom