Long-term U.S. mortgage rates fell this week for the second week in a row, despite the Federal Reserve's efforts to lift borrowing costs.
Mortgage buyer Freddie Mac says the rate on 30-year, fixed-rate mortgages slid to 3.92 percent from 3.96 percent the previous week. While historically low, that is still above last year's average of 3.65 percent.
The rate on 15-year, fixed-rate home loans, popular with homeowners who are refinancing their mortgages, eased to 3.2 percent from 3.23 percent last week.
Mortgage rates haven't increased much even though the Federal Reserve has boosted its benchmark rate four times in the past 18 months. That's because mortgage rates follow the yield on the 10-year Treasury note, which is influenced by many factors. Greater demand by overseas investors can lower the yield.
To calculate average mortgage rates, Freddie Mac surveys lenders across the country between Monday and Wednesday each week. The average doesn't include extra fees, known as points, which most borrowers must pay to get the lowest rates. One point equals 1 percent of the loan amount.
The average fee for a 30-year mortgage slipped to 0.5 point from 0.6 point last week. The fee on 15-year loans was unchanged at 0.5 point.
Rates on adjustable five-year loans dipped to 3.18 percent from 3.21 percent last week. The fee held steady at 0.5 point.
WASHINGTON–More people are renting than at any other point in the past 50 years.
In 2016, 36.6% of household heads rented their home, close to the 1965 number of 37%, according to a new report by the Pew Research Center that is based on Census Bureau data.
Pew reported the total number of U.S. households grew by 7.6 million over the past decade, but the number of households headed by owners remained relatively flat, while households headed by renters grew by nearly 10% during the same time period.
Richard Fry, a senior researcher at Pew and one of the report's authors, cited rising home prices, lingering fears from the housing crash, and large amounts of student debt as some of the reasons why many Americans are renting rather than buying.
Perhaps not surprisingly, Millennials (those age 35 and younger) continue to be the most likely of all age groups to rent, Pew found. In 2016, 65% of households headed by young adults were renting, up eight percentage points from 2006.
How The Rental Property Market is Changing: "SAN FRANCISCO–New data show that increasingly private investors are taking advantage of low mortgage rates and rent growth by investing in rental properties, which is affecting the supply of homes and, as a result, prices on both homes and rental rates.
According to data released by Zillow, the share of single-family homes being used as rental properties is at a 30-year high, and the number of starter homes on the market is down more than 44% from 2012.
The real estate analysis firm Ten-X reported that prior to 2009 before institutional investors moved into housing, more than 95% of rental homes were owned by investors who owned five or fewer properties. With investment firms now slowing their pace of acquisitions, individual investors are back in the market, the firm said."
5 tips to bounce back after a foreclosure or short sale | Miami Herald: "Philip and Denise Powell lost their home in 2011 after Philip's hours as a pastor were cut in half and Denise was sidelined by a surgery. But they were determined to become homeowners again, so they rolled up their sleeves and got to work.
The Highland, California, couple got financial counseling. They took control of their credit reports, tackled high-interest debts and cut spending. In 2015, they bought another home.
"We thought we'd never recover," Philip Powell says, recalling the devastation they felt after losing their home. "No one in California was ready for the crash; it hit us hard."
Their story is typical of the more than 9.3 million homeowners who lost a home through a distressed property sale from 2006 through 2014, according to the National Association of Realtors."
"The South Florida real estate market has exhibited remarkable sensitivity to global trends over the past few years, due in no small part to an unremitting dependence on foreign capital to prop up the sector. A recent dearth of overseas investors might upend the current situation, however—and this is not a contingency that even active Canadian buyers can help with, observers said.
Foreign buyers in Miami have traditionally consisted of South Americans, Europeans, Russians, and Canadians, but new figures from Integra Realty Resources showed that activity from Brazil and Argentina has slowed down lately due to a 42 per cent and 40 per cent (respectively) decline in both countries’ purchasing power since 2014.
Integra officials said that a weakening in the South American segment might trigger a crisis in Miami’s condo market, as this slice represents the lion’s share of foreign real estate investment in the city.
“The depth of the Chinese market, or the European or Canadian market, is not enough to make up for the South American buyer,” Integra senior managing director Anthony Graziano told the Wall Street Journal.
According to research conducted by Miller Smauel Inc., the last quarter of 2015 saw a significant 20 per cent drop in Miami condo transactions on a year-over-year basis. This accompanied a 6.6 per cent decline in average sale price, as well as a 33.3 per cent increase in inventory.
Along with numerous cancellations of pending projects by multiple developers, these recent changes have led several experts to warn that the city’s condo sector is now running headlong into a watershed.
“The condo market has peaked. Sales velocity has slowed down considerably,” Miami-based real estate development lawyer Neisden Kasdin said."
"For more than a year, signs have been pointing toward a sharp downturn in Miami's condo market, and developers are positioning themselves for the bubble to burst.
Carlos Rosso, president of condominium development at Related Group, tells the Wall Street Journal that this time last year, his company was selling an astonishing 100 units a week in Miami. This year, it's averaging about 20 per week. Condo transactions in Miami Beach were down about 20 percent in the last quarter of 2015 compared to 2014.
Though the median sale price of condos in Miami-Dade has continued to rise slowly, developers don't expect the trend to continue. More than 7,300 new units are in the pipeline, and developers tell WSJ they're preparing to lower prices and offer more perks to move them. "
Home prices in South Florida have risen steadily over the last couple of years, with new construction ramping up across the area. Now, some are worried the Miami housing market could be headed for another crash. The dreaded ‘B’ word — bubble — is being tossed around again, as well.
Some economists have forecast that home prices in the area will remain mostly flat in 2016, after many months of steady growth. Here are some notable real estate trends and predictions for the Miami real estate market in 2016.
Miami Real Estate Market to Crash in ‘Next Few Years’
In an interview with The Washington Post, Miami real estate expert Jack McCabe said that the South Florida housing market could be headed toward another bubble-and-bust cycle,
The U.S. government is cracking down
on money laundering in luxury real estate, thanks in part to the investigative
prowess of the New York Times.
The Treasury Department's Financial
Crimes Enforcement Network (FinCEN) announced Wednesday it had issued
"geographic targeting orders" for Manhattan and Miami-Dade County,
Florida, that would compel title insurance companies to report on clients who
pay for big real estate purchases — think $3 million for Manhattan and $1
million for Miami — in cash. The new measures will take effect on March 1 and
remain in place until Aug. 27; if they unveil as much illicit activity as the Times
turned up in its 2015 "Towers of Secrecy" series, the government
will beef up nationwide tracking efforts.
"We are seeking to understand
the risk that corrupt foreign officials, or transnational criminals, may be
using premium U.S. real estate to secretly invest millions in dirty
money," FinCEN Director Jennifer Shasky Calvery said in the announcement.
"These GTOs will produce valuable data that will assist law enforcement
and inform our broader efforts to combat money laundering in the real estate
sector."
The main target of the fed's effort?
The so-called shell company, which is exactly what it sounds like: a legal
business, but in name only; a kind of corporate facade that has no operational
activity but is used to shuffle money around.
Not every shell company is a front
for illegal activity; many start-ups, for example, find it useful to set up a
shell before operations are in full swing. For people looking to stash some of
their wealth in an untaxable asset like a building or apartment, however, the
establishment of a shell corporation is an attractive option — the investor's
name won't appear on the bill of sale, but the corporation's will. Shell
companies provide a veil of anonymity; the Times reported that backers can
build shell companies on top of shell companies to create a big, confusing
onion-like disguise. Little surprise, then, that the Economist has called
them "the vehicle of choice for money launderers, bribe givers and takers,
sanctions busters, tax evaders and financiers of terrorism."
FinCEN says that title insurance
companies are implicated in most every real estate sale closed, meaning they're
full of information the government would love to know. When a shell company
attempts to make an all-cash purchase, the title insurance company will be
obligated to dig up and report the name of that shell's owner to FinCEN, which
will then log it in a database — a key resource for law enforcement
investigating money launderers.
According to the Times, almost half
of all homes purchased across the U.S. valued at $5 million or more were made
through transactions with shell corporations. In its "Towers of
Secrecy" series, the newspaper profiled a number of shady characters
funneling money into U.S. real estate, all of whom occupied one of the most
prominent luxury buildings in the New York real estate landscape: the Time
Warner building.
There was the "Mysterious
Malaysian Financier," the hard-partying Jho Low, whose shell company
financed the purchase and rapid resale of a few multi-million dollar homes to
the stepson of Malaysia's Prime Minister, Najib Razak. The Times reported that
Low conducted many of his business transactions on behalf of his
"friends," and it was his friendly connection to the Malaysian ruling
family that looked particularly suspicious, as if he might be involved in
laundering the money of a corrupt head of state through the sale and resale of
a few pricey New York City and Los Angeles properties.
There were "the Russian Minister
and Friends," the "Mexican Power Brokers" and the "Besieged
Indian Builder," all with similar stories. Over the course of its
investigation, the Times found 200 shell companies with stakes in the Time
Warner Center over the past 10 years, and 16 apartment owners who had been
investigated by governments the world over, all of whom used shell companies to
mask astronomical real estate purchases without anyone batting an
eyelash.
Why? Because money flowing into U.S.
markets is good. "We like the money," Raymond Baker, president
of the Washington-based nonprofit Global Financial Integrity, told the Times.
"It's that simple. We like the money that comes into our accounts, and we
are not nearly as judgmental about it as we should be."
What does Global Financial Integrity
do? According to the Times, it "tracks the illicit flow of
money."
Which is why the newspaper's
investigation was so important: It blew the lid off of staggering sums siphoned
into the U.S. by a litany of unsavory characters and drew public attention to
the practice in a way the government couldn't ignore.
One area of Florida that forecasters expect to cool off as far as home values is the Miami housing market. Miami is second only to Jacksonville in size. In the past year home values increased by 5.1%, but forecasters see this rate leveling off in the next year. Miami boasts some of the most expensive real estate in the Florida housing market. The median home value in Miami is $284,300 and the median rent price is a staggering $2,350. Median list prices come in at $409,000 and sale prices at $324,000. This differential in pricing is an indicator that the South Florida market has become a buyers market. According to RealtyTrac, South Florida flips were down 25% at the beginning of this year. Flippers can no longer make large profits on homes and because of this the market is turning towards the buyer. The percentage of delinquent on mortgage comes in at 12.6% and 20.4% of Miami homeowners are underwater on their mortgage. Miami is a great buy if you can afford it, but don’t look for a large return on your investment anytime soon.
Miami’s luxury residential resale market diverged in the first quarter of the year as single-family home sales increased from last year’s first quarter and sales of existing condos dropped.
The Miami Association of Realtors, classifying luxury sales as those above $1 million, reported that the number of luxury single-family home sales increased 2.3 percent in the first quarter, compared to last year’s first quarter, while luxury condo resale's dropped 3.6 percent.
New condo construction cut into sales of existing condos, but resale prices appear buoyant. The Miami Association of Realtors reported that the median condo resale price was $1.7 million in the first quarter, up 13 percent from $1.5 million in the same period last year.
Miami Real Estate Continues Selling Fast, Close to List Price Miami single-family homes and condominiums continue to sell close to asking price, reflecting a strong consumer demand. The median number of days on the market for single-family homes remained unchanged year over year at 47 days. The average percent of original list price received was 95 percent, an increase of 0.7 percent from a year earlier. The median number of days on the market for condominiums sold in May 2015 was 57 days, an increase of 7.5 percent from 53 days in May 2014. The average percent of original list price received was 94.1 percent, a 0.2 percent decrease.
Miami's Cash Buyers Represent More than Twice the National Average Cash deals represented 49.5 percent of Miami's total closed sales in May 2015, more than double the national average. Just 24 percent of all national housing sales are made in cash, according to NAR. Cash transactions represented 56 percent of total Miami deals in May 2014. Miami's high percentage of cash sales continues to reflect South Florida's historic ability to attract international home buyers, who tend to purchase properties in all cash. Condominiums comprise a large portion of Miami's cash purchases as 63.9 percent of condo closings were made in cash in May compared to 33.2 percent of single-family home sales.
Single-family home transactions — which set an all-time Miami annual record in 2014 — increased 10 percent year-over-year in March 2015, from 1,129 to 1,242. Existing condominium sales — which posted the second best year in Miami history last year— rose 4.2 percent from 1,413 in March of last year to 1,472 last month. Combined, Miami-Dade County residential real estate sales increased 6.8 percent to 2,714 last month compared to 2,542 a year ago.
“Miami continues to attract international and domestic home buyers looking to live in a global city with world-class amenities and a diversified economy,” said Christopher Zoller, a 27-year Miami-based Realtor and the 2015 Residential President of the MIAMI Association of REALTORS. “Buyer demand in Miami properties is leading to more sales and higher sale prices.”
Single-family home prices, which again increased in March, remain at affordable 2004 levels despite more than four years of consistent year-over-year increases. Condo prices also increased in March 2015, marking 45 months of growth in the last 46 months. The median sale price for single-family homes increased 10.6 percent, up to $260,000 in March 2015 from $235,000 in March 2014. The average sale price for single-family homes increased 3.2 percent to $473,677 last month from $459,102 during the same time period last year.
The median sale price for condominiums surged 7.5 percent in March to $215,000 from $200,000 a year ago. The average sale price for condos increased 5.8 percent to $398,994 from $377,290 in March 2014.
Miami Real Estate Continues Selling Fast, Close to List Price
Miami single-family homes and condominiums continue to sell close to asking price, reflecting a strong consumer demand. The median number of days on the market for single-family homes sold in March 2015 was 54 days, an increase of 14.9 percent compared to the same period in 2014. The average percent of original list price received was 94.6 percent, down a negligible 0.3 percent from a year earlier.
The median number of days on the market for condominiums sold in March 2015 was 60 days, an increase of 1.7 percent compared to the same period in 2014. The average percent of original list price received was 93.5 percent, a 0.7 percent decrease.
Houses are staying on the market longer in the Miami area than in most other big cities around the country, according to a report by the online real estate company Trulia.
The likely culprits? High prices and a glut of new inventory, said Trulia chief economist Ralph McLaughlin.
“Miami is in this weird stalemate situation where sellers probably don’t want to reduce the price of their units because they don’t want to lose money, but middle-class buyers aren’t able to afford them,” McLaughlin said. “So what we’ll see is homes sitting on the market longer until either sellers decide to lower their sales price or the economy continues to improve and buyers can start to afford them.”
About 65 percent of Miami-Dade County homes listed on Trulia’s website in February were still on the market two months later, the company found.
Related
Of the 100 largest housing markets the company analyzed, only nine cities had a greater percentage of homes on the market after two months. They included Albany, New York; Knoxville, Tennessee; Pittsburgh, Pennsylvania; and Birmingham, Alabama.
The analysis looked at both new sales and resales of single-family homes, condominiums and town houses.
Miami also saw one of the biggest year-over-year jumps in the percentage of homes staying on the market. In April 2014, 56 percent of homes listed on Trulia had been on the market for two months. Only Austin and Atlanta saw bigger annual increases.
An unusual combination of factors is producing a tough market for both buyers and sellers: Miami is one of the least affordable housing markets in the U.S. at a time when new development is happening across the county, which has about 18,000 new units under construction, according to a Census estimate.
“This combination of new supply and waning demand because of affordability would lead to a situation where homes stay on the market longer,” McLaughlin said.
