Lows, Highs, and Whys

Homes are flying off the shelves this spring, as demand rises and supply continues to drop. Home sales jumped nearly 9 percent in March compared with March 2016, even as the number of homes for sale plunged 13 percent, according to Redfin, a national real estate firm.

A sizzling spring for market sales is keeping optimism high even though supply continues to hit disturbing lows leaving sellers in the hot seat facing frustrated buyers. According to Redfin’s chief economist, Nela Richardson, “The combination of low inventory, high prices and strong competition will continually challenge first-time buyers this year and they are the cornerstone of the housing market,” as reported by CNBC. In a cyclical effect, shockingly low inventory levels are pushing up home prices so much that even rising incomes are unable to brace the climb, forcing affordability down. Housingwire.com explains, “Rising home prices combined with higher interest rates caused affordability to decrease in March.” And, although Freddie Mac’s chief economist, Sean Becketti, asserts, “For-sale housing inventory, especially starter homes, is currently at its lowest level in over ten years,” CNBC affirms that, “Record high prices in some local markets are not thwarting hungry buyers, as they rush to take advantage of the lowest mortgage rates of the year.”

Interestingly, Freddie Mac offers four key reasons for the ongoing squeeze on supply levels and, ironically, the first of these is fear itself as Housingwire.com explains, "Homeowners are hesitant to put their home on the market as they are unsure if they will be able to find a new home in their budget once they sell theirs." Also making the list of top logic are issues like rising mortgage rates as homeowners stick to their current lower rates, home prices sitting at values just short of what is owed, and a slip in housing starts, nearly 7 percent in March, which experts are dubbing "lackluster growth" that "won't be enough to meet the rising demand," recaps real estate reporter, Kelsey Ramirez. All highs and lows considered, market meanderers are left to bend around the whys in an effort to find some balance on the homeownership ride. 

Source - California Association of Realtors March 2017

Courtesy of JMJ Financial Group

If you are ready to buy, sell, or refinance, we are here to help with your next mortgage. 

Todd Burns - NMLS 254981
JMJ Financial Group
949-547-3557
WEBSITE

New and Existing

Given the scant listings, another competitive spring buying season is likely. Last month, there was a smaller supply of homes for sale than a year earlier in every Southern California county, data from the California Association of Realtors show. Real estate agents say the shortage has people crowding open houses. As sunlit days get longer going into early spring, consumer confidence is still coming out of the shadows as the dull numbers in existing home sales for February don’t have experts fried. In fact, according to Housingwire.com, “Experts predict the combination of pent-up housing demand and historically high consumer confidence will increase existing home sales in the months ahead.” Locally, in sunny Southern California, a hike in home prices resulted in what the Los Angeles Times is hailing, “the largest increase in more than a year, as buyers rushed to outbid one another for a meager selection of homes for sale.” Yet, although the umbrella of high home prices is upon us at home, the housing forecast is currently clear of showers as, with a vibrant outlook, experts like Svenja Gudell, chief economist for Zillow, maintains, “It’s important not to read too deeply into the one-month dip in existing home sales in February; the housing market is still running quite hot, and the next few months look to be as competitive and fast-moving as ever.”

On a broader spectrum, the Wall Street Journal sheds light on the glaring issue of new home sales by stating, "In a sign that builders are responding to demand, the number of homes for sale at the end of February rose to the highest level since July 2009." Nationally, defying all gloomy expectations, "U.S. new home sales increased sharply for the second consecutive month in February, an indication that growing demand and a pickup in construction activity could propel a strong spring selling season for this segment of the market," clarifies real estate reporter, Laura Kusisto. And, as temperatures rise, "Economists expect new-home sales to continue to increase this year as builders step up construction of single-family homes and more first-time buyers enter the starter-home market," as the Wall Street Journal connects the rosy housing outlook to such conditions as a "strengthening economy and unseasonably warm weather". Even though the hazy days of winter hold on tight, the near future for housing is certainly looking bright. Courtesy of JMJ Financial Group

If you are ready to buy, sell, or refinance, we are here to help with your next mortgage. 

Todd Burns - NMLS 254981
JMJ Financial Group
949-547-3557
WEBSITE

The Balancing Act

Rising home values are more important because the value of houses far exceeds the value of stocks held by individuals. Even so, the homeownership rate hovers near a five-decade low and well below its pre-crisis peak. This explains why the so-called wealth effect isn’t having as much of an impact on overall consumer spending and economic growth as it used to.

The peaking consumer confidence in housing recently reported remains in spite of today’s news doused in rumors of rising mortgage rates. In reality, although Americans are richer than ever, they’re not quite feeling that way while, according to The Wall Street Journal, in 2016, “As of the third quarter, American Households had roughly $105 trillion in assets and $15 trillion of debt. And as home values kept rising and stock prices surged following the election, it likely only increased.” Some uncertainties in the economy caused mortgage rates to fall at the beginning of this month and, subsequently, Sean Becketti, Freddie Mac chief economist, was quoted as saying, “With the housing market on the verge of the spring homebuying season, this is good news in an environment where historically low mortgage rates will help offset the pace of house price growth and lack of for-sale inventory in many markets,” as reported by The Washington Post. Presently though, directly following the fall, “Mortgage rates followed the 10-year Treasury yield for the first time in 2017 with a substantial increase from last week,” reports Housingwire.com.

Even with this flux and an air of suspicion that the Federal Reserve is gearing up for a March rate hike, experts are able to find the bright side. With this, Housingwire.com offers an analysis of the latest Mortgage Monitor Report, just released by Black Knight Financial Services, claiming, "The nation's housing market is looking up with an annual increase of 17% in mortgage originations in 2016." In addition, sentiments from the National Association Of Realtors are positive with, "Buyer demand is much stronger than supply at the moment and the economy and job growth are continuing to support the housing market." Thankfully, today's housing market is still being referred to as "a virtuous cycle" by MarketWatch, reiterating that, "Home equity has recovered, mortgage rates remain low enough to be manageable, and high rents make homeownership attractive." In a year already full of surprises, conditions are weighing out as the market steadily finds some balance in the midst of the first quarter act. 

Courtesy of JMJ Financial Group

If you are ready to buy, sell, or refinance, we are here to help with your next mortgage. 

Todd Burns - NMLS 254981
JMJ Financial Group
949-547-3557
WEBSITE

All Aboard

January’s version of Fannie Mae’s Home Purchase Sentiment Index showed that consumers’ confidence in housing improved for the first time in five months, and February’s survey saw consumers’ sentiments improving even more.

Good vibes are rocketing through the housing market going into the hot spring selling season and buyers are ready for takeoff. January’s runway of consumer confidence has resulted in an ongoing ascent as, “Fannie Mae’s latest Home Purchase Sentiment Index (HPSI) shows that consumer confidence in housing hit an all-time high in February, continuing a climb in confidence that began in January,” as reported by Housingwire.com, also citing that the index “increased by 5.6 percentage points in February to 88.3, setting an new all-time high”. Senior vice president and chief economist at Fannie Mae, Doug Duncan, claims, “The latest post-election surge in optimism puts the HPSI at its highest level since its starting point in 2011.” Experts across the housing horizon seem to agree as CNBC reports, “Both buyers and sellers alike are feeling very good about the housing market this spring, even as home values hit new highs and mortgage rates move up.” So, despite some sluggish market conditions including lingering constrained housing affordability, prospective home buyers are definitely heeding the call to jump on board.

And in the waiting line skyward, the housing force is being fueled by other positive increases. Real estate reporter, Ben Lane, points to the recent HPSI with, "Additionally, consumers also reported increased confidence about not losing their jobs," which, in part, caused an 11 percentage point rise in the net share of Americans who said that now is a goo time to by and a 7 percentage point rise in those who believe that now is a good time to sell, states Housingwire.com. In fact, CNBC reveals that in general, "More Americans are also reporting slightly higher household income, and a growing number expect home values to rise." Everything considered, all signals point to a first class spring season with experts like, Frank Martell, CEO of CoreLogic, plainly stating, "Home prices continue to climb across the nation, and the spring homebuying season is shaping up to be one of the strongest in recent memory." All turbulence aside, overall economic strengths are making for smooth air and a solid lift off for consumer morale this spring. 

If you need a mortgage for a purchase or refinance, we would love the opportunity to work on your behalf. 

Todd Burns NMLS 254981
JMJ Financial Group
949-547-3557
WEBSITE

Some Things Never Change

Fifty-three percent of millennials own homes and overall, 88 percent of millennials who do not own a home have one on their wish list. The sharing economy is here to stay and has changed how many people work and live. But it doesn’t mean that traditional purchases such as cars and homes are less enticing to millennials.

Check any average millennial’s top-ten purchase list and you’ll find things like energy drinks, tattoos, Sriracha sauce, and organic food, according to the Millennial Study 2017 performed by Accel + Qualtrics. And, smack dab in the middle of the list is none other than a home, despite the equally high value millennials place on maintaining their mobility. What remains in question is not if millennials want to buy but how. According to founder of Gen Y Planning and a member of the CNBC Digital Financial Advisor Council, Sophia Bera, millennials are definitively transitional and their views on homeownership follow suit. She states, “I am seeing people go from renting to buying and renting again to buying again, as opposed to buying and holding that property for decades.” And, despite their nontraditional, vagabond-style consumerism, millennials remain fearless to put down their roots even if they quickly dig them up and plant anew.

In an ever-changing, accelerated world, the new wave of buyers have, in the past, been shown to take the consumer express lane, preferring online renting options while bypassing ownership of all kinds altogether. According to CNBC, "The success of start-ups like Netflix, Spotify, and Uber have led to predictions that future Americans will choose not to own and drastically shape the future consumer society." But, as of late, millennials are busting open that myth in terms of the way in which they approach homeownership, proving that they are not that different from past generations in their hunger to own a home. And, as millennials are now reaching their peak spending years while the world keeps turning at an even fast hurried pace, "The number of millennials who aspire to own homes holds steady whether they live in metropolitan or rural areas," says Mike Maughan, Qualtrics head analyst. Apparently, amidst a millennial world consumed with change, the dram of owning a home quite simply, won't.

Article courtesy of JMJ Financial Group

Need a Home Loan? Click here

In The Ring

Existing-home sales stepped out to a fast start in 2017, surpassing a recent cyclical high and increasing in January to the fastest pace in almost a decade, according to the National Association of Realtors. All major regions except for the Midwest saw sales gains last month.

Experts agree that 2017 is off to a strong start “despite a limited supply of properties-for-sale and rising prices”, according to the Wall Street Journal, also reporting that, “U.S. home sales rose in January to the highest level since February 2007.” A few contributing factors are in the lead, all of which are igniting a newfound aire of momentum in the industry. With inventory levels steady at low, “marking the 20th consecutive month of annual declines”, according to Housingwire.com, a spark in confidence is bench pressing the buyer’s market and it’s holding steady. NAR chief economist, Lawrence Yun, asserts, “Much of the country saw robust sales activity last month as strong hiring and improved consumer confidence...have sparked considerable interest in buying a home,” and further contends that, “the housing market is off to a prosperous start as homebuyers staved off inventory levels that are far from adequate.” All things considered, this buyer strong arm is exactly the force needed to shove other mediocre market conditions aside.

Moreover, experts agree that as buyers work it out, the housing arena can brace itself for a brawny year ahead. Svenja Gudell, chief economist for Zillow, excercises her opinion with, "Overall, this is an exceptionally strong way to start the year, and it's clear that demand is likely to continue to be very high as the market enters the spring," as reported by The Wall Street Journal. Similarly, Nela Richardson, chief economist for Redfin Corporation, states, "Buyers are in force in 2017," as reportdly, the firm "is seeing the highest demand for homes...since January 2013". Without a doubt, as competition gears up for spring, this restored body of purchasing power is ready for the ring. And with buyers in flex, this year's market crunches are not projected to win the match.

Source: California Association Of Realtors January 2017
Article courtesy of JMJ Financial Group

Need a home loan? Click here

I DO do this for the money...but not mine

As a mortgage loan originator, there is money to be made. Sure, we make a commission on each transaction, but what we earn is nothing compared to the money at stake for the other parties. The real money on the line is by the buyer, seller, and the agents who worked hard to put the two parties together. 

Real Actions = Real $$$$$

From the moment the offer is accepted and escrow opened money is being budgeted and spent by the buyer and seller. Buyers are paying for an appraisal, inspections, depositing thousands of dollars into escrow, and preparing their final funds by liquidating investment accounts, obtaining gift funds, or consolidating money from various accounts. Sellers are ordering HOA documents, making repairs, completing termite work, placing a deposit on their next property, ordering movers and packing materials with each party upending their current life to start anew. 

Time Is Money

Then there are the agents who have often worked for months preparing their client for the transaction spending countless hours researching, prospecting, networking, previewing, counseling, negotiating, holding broker preview and open houses, spending money on catering and advertising materials, and using their knowledge and skill to put their client in the best possible position with the ultimate goal of closing the deal for them.

The Loan Originator Role

All real estate transactions with a loan or mortgage depend on the "lender" to put the final piece of the puzzle together, and it is most often the one piece that will lead to a successful close or be responsible for its demise. For the loan originator (LO), we have worked with the buyer and their agent preparing them for a impending purchase often well before the buyer makes an offer. The mortgage loan originator creates a very intimate relationship with the buyer establishing trust through actions and our words. We request and review every financial document, credit profile, job history, and look at life changes such as separation or divorce, bankruptcy, or other event which can impact the loan. With this information a loan originator then must determine how to "put the loan together" because it is a puzzle, and everyone has a different life. 

From the initial consultation, the buyer is hanging on the loan originator's every word and recommendation and then deciding if the information provided is reasonable and trustworthy. A seasoned LO will provide the client with budgetary monthly payments and closing cost estimates which should be reasonably accurate. The LO confirms, to the best of our ability, the property meets minimum guidelines and sometimes informs the buyer about properties or locations that will not fit their scenario (and why) so they can narrow their property search. A professional LO will understand how to increase credit scores which can help a buyer qualify or reduce their rate, and they are adept at identifying potential issues which need to be addressed early on in the process then develop a plan to overcome the issue using the underwriting guidelines as the roadmap.

The Pressure Is Real

Yes....the LO feels pressure. All of the legwork leading up to the offer and acceptance better have been accurate because now everyone is looking to the lender to perform what has been promised in a prepapproval letter. Immediately upon acceptance all parties are expecting the LO to make sure the buyer meets the terms of the contract. Everyone is looking to the Contingency Removal date and expecting the buyer to sign off stating they have loan approval and a satisfactory value on the appraisal. It is basically the buyer's commitment to the deal, and the lender can only get them to that point. All of the work leading up to the buyer's offer and ultimate acceptance relies solely on the lenders ability to perform, and if they have done their job correctly everything will go as planned. If not, the buyer, seller, and agents have put a tremendous amount of effort, money, and faith on a commitment written on a short 1-2 page letter which simply says this buyer is fully capable of purchasing a home. 

I take my role and responsibility in each and every transaction seriously, but not for the money. The money earned by a LO on a loan is minimal compared to the funds on the line for the other parties. The truth is I could not sleep at night if I was responsible for a transaction falling out of escrow, or worse having to tell a buyer that unfortunately I made a mistake and they cannot purchase a home. Relationships I have built and friendships made would be destroyed if I didn't make sure my attention to detail was spot on. This is the wrong profession to be mediocre. There are more successful LO's than me. But, I measure my success by delivering on results based on my recommendation, closing every transaction I say will be closed, and ensuring that every opportunity I have to help someone buy, sell, or refinance a property is done with professionalism, attention to detail, and standing by my promise to deliver on a commitment. 

It would be my sincere privilege to assist you, and I promise to do my very best to deliver the results you expect. 

Todd Burns

JMJ Financial Group

949-547-3557

tburns@jmj.me

NMLS 254981