The Best Month and Day to List is?

Spring has officially sprung, but the spring housing market started about a month ago, according to most real estate agents. With the supply of homes for sale not even close to demand, competition has been fierce, and that is changing the rules of the real estate road. Yes, it’s a seller’s market, but not all homes sell quickly, especially if they’re not priced right and if the timing isn’t right.

When is the best time to sell? That depends on whom you ask.

“It’s early May, and the reason is because inventory being so tight, a lot of homebuyers are having to put in multiple offers. That is extending the length of the homebuying season, such that a lot of times later on in the season people are more eager to buy the house because they have been frustrated with earlier offers, and they are paying a little bit more money,” said Stan Humphries, chief economist at Zillow Group.

There are 9 percent fewer homes this buying season compared with a year ago, so listing in early May results in you selling your house about 18 days faster and for about 1 percent more than you would get otherwise, according to Zillow.

In other words, Zillow expects a buyer-desperation factor come May that will result in buyers paying more. Back in 2011 and 2012, when there was less buyer competition, March was best for sellers. Zillow then looked at the last two years, when competition was hotter and found May was better in 18 of the largest 25 metropolitan housing markets.

“In most markets right now we are seeing the conventional way of buying to have shifted really to staging for multiple offers, which is a huge shift from where we were just three-four years ago,” Humphries said.

What Happened to Rates Last Week?

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Mortgage backed securities (FNMA 3.00 MBS) lost -29 basis points (BPS) from last Friday’s close which caused fixed mortgage rates to move higher from the prior week.

So far for the month of March, our benchmark FNMA 3.0 April coupon is down -81 basis points which is the direct driver for our higher rates this month.

We had a holiday-shortened trading session in the long-bond market with Friday’s close for Good Friday.

Domestic Flavor:

GDP: 4th QTR GDP ( 3rd release) came in at 1.4% vs est of 1.0%. This is a much stronger revision than expected as four tenths on an economy our size is huge.

Manufacturing: With all of the better than expected regional manufacturing reports, its a disappointment that Durable Goods Orders were so weak. The Headline number for Feb was -2.8% vs est of -2.9% – so a little better than expectations (really less-worse), but when strip out the big volatile Transportation sector, it was much weaker than expected (-1.0% vs est of -0.2%). Plus, January’s robust readings were revised lower.

Jobs, Jobs, Jobs: Initial Weekly Claims were a smidge lower than expectations (265K vs est of 268K). The more closely watched 4 week moving average dropped below 260K(259.75) which is an extremely low trend line and a positive for the labor market and our economy.

The Talking Fed:

We had several speeches last week and even though most of them were from non-voting members, the overall theme was that sentiment among the Federal Reserve Presidents seems much more “hawkish” (rate tightening) that previously thought.

Chicago Fed President Charles Evans said in a speech in Chicago that he sees strong economic growth and that the Fed is in a “wait and see” course and should act once they see the economy on a “path” to 2% inflation. MBS sold off on this for two reasons: 1) He is usually considered very “dovish” but these were “hawkish” comments and 2) The specification of a “path towards 2%” inflation is not the same as seeing 2% inflation, i.e. the Fed can act sooner.

St. Louis Fed President James Bullard said “The relatively minor downgrades… suggest that the next rate increase may not be far off provided that the economy evolves as expected,” as he has switched to a more hawkish tone from last month.

Philadelphia Fed President Patrick Harker, said that while he supported March’s decision by his colleagues to leave policy unchanged, “there is a strong case that we need to continue to raise rates.”
“I think we need to get on with it,” said Harker, and “This economy is really quite resilient to a lot of the headwinds (including the strong dollar), so if that continues I would be supportive of another 25 basis point rise.”

What to Watch Out For This Week:

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The above are the major economic reports that will hit the market this week. They each have the ability to affect the pricing of Mortgage Backed Securities and therefore, interest rates for Government and Conventional mortgages. I will be watching these reports closely for you and let you know if there are any big surprises.

It is virtually impossible for you to keep track of what is going on with the economy and other events that can impact the housing and mortgage markets. Just leave it to me, I monitor the live trading of Mortgage Backed Securities which are the only thing government and conventional mortgage rates are based upon.

Brought to you by:

Taff Weinstein
Broker/Owner
Office: 832-794-2136
Cell: 832-794-2136
taff@firstimperialmortgage.com

First Imperial Mortgage
3409 Morrison St
Houston, TX 77009
NMLS 225846

Copyright © 2016 Powered by www.MBSauthority.com

Yearly Existing Home Sales Continue to Increase

The Existing Home Sales report (homes that have been previously occupied) is hot off the press.  The National Association of Realtors released the data this morning for the largest segment of our housing market.

Total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, came in at an annual rate of 5.08 million in February which is 2.2 percent higher than a year ago.

Job growth and low rates continue to fuel the housing market but a severe lack of inventory is making it difficult to move at a faster pace and was the primary reason that the month-over-month reading fell.

The median existing-home price for all housing types in February was $210,800, up 4.4 percent from February 2015 ($201,900). February’s price increase marks the 48th consecutive month of year-over-year gains.

Total housing inventory at the end of February increased 3.3 percent to 1.88 million existing homes available for sale, but is still 1.1 percent lower than a year ago (1.90 million). Unsold inventory is at a 4.4-month supply at the current sales pace, up from 4.0 months in January.

All-cash sales were 25 percent of transactions in February, down from 26 percent both in January and a year ago. Individual investors, who account for many cash sales, purchased 18 percent of homes in February (17 percent in January), matching the highest share since April 2014. Sixty-four percent of investors paid cash in February.

What Happened to Rates Last Week?

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Mortgage backed securities (FNMA 3.00 MBS) gained +59 basis points (BPS) from last Friday’s close which caused fixed mortgage rates to move lower and basically reversed the -60BPS loss from the prior week.

Net of the see-saw of the last two weeks (-60, +59), MBS are down -52BPS for the month of March. MBS had a volatile week with a 103 BPS swing between our intra-week lows and our intra-week highs.

MBS were trending lower (higher rates) until Wednesday’s FOMC meeting.

It was Central Bank Palooza last week and their collectively timid responses to global economic forces helped our long bonds to improve for the week as international investors bought our debt as the least-worst place to put their money.
Japan: The Bank of Japan’s Governor Haruhiko Kuroda and his board left their key interest rate alone which is at -0.1%. This was widely expected. They did say that they were prepared to drive that rate even more negative if the economy warrants it.
England: The Bank of England left their key interest rate unchanged and express concern over the falling value of their currency (Sterling). They also expressed concern over global growth and the looming “Brexit” vote. As a result of potentially not being in the EU (they never have been a part of the European Monetary Union but are part of the trade union), they are going to hold back on spending (for obvious reasons) until they know the outcome of the vote.
The Talking Fed: We got the latest and greatest from our Federal Reserve. As expected, they left their key interest rate unchanged.

The vote was 9-1 with the lone vote wanting to raise rates. The following is their official policy statement: https://www.federalreserve.gov/newsevents/press/monetary/20160316a.htm
They also released their summary of the Economic Projections. You can read the official release here: https://www.federalreserve.gov/monetarypolicy/fomcprojtabl20160316.htm

The Not So Data Dependent Fed: In the policy statement and in Yellen’s comments, they made it clear that that they are less concerned with domestic data and more concerned with China, Oil and global financial stability. Reading between the lines…it once again appears that other foreign Central Banks (China, Japan) and even OPEC can dictate our own policies in the near term.

They did note that Inflation has picked up but remains well below their target rate and might not break above 2% for 2 or 3 years (unless oil spikes). They reaffirmed that they will raise rate at a very gradual pace. They do acknowledge strong job gains. They did upgrade their concerns over global developments and that they continue to pose risk to our economy. The Fed is not considering nor going to implement any negative interest rate policies.
Projected Rate Path: In their published projections, the interest rate that has the greatest number of FOMC members (9) in it is 0.875% which would mean 2 rate hikes this year. There were a total of (7) that are projecting a rate of 1.00% or higher by the end of this year which would mean 3 rate hikes. So, while the headlines may say 2 rate hikes, in reality the members of the FOMC are actually solidly projecting 2 to 3 rate hikes this year which is a reduction from their last release (December) where their projections were for a solid 4 rate hikes.

What to Watch Out For This Week:

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The above are the major economic reports that will hit the market this week. They each have the ability to affect the pricing of Mortgage Backed Securities and therefore, interest rates for Government and Conventional mortgages. I will be watching these reports closely for you and let you know if there are any big surprises.

It is virtually impossible for you to keep track of what is going on with the economy and other events that can impact the housing and mortgage markets.  Just leave it to me, I monitor the live trading of Mortgage Backed Securities which are the only thing government and conventional mortgage rates are based upon.

Brought to you by:

Taff Weinstein
Broker/Owner

Office: 832-794-2136
Cell: 832-794-2136
taff@firstimperialmortgage.com

First Imperial Mortgage
3409 Morrison St
Houston, TX 77009
NMLS 225846

www.firstimperialmortgage.com

Copyright © 2016 Powered by www.MBSauthority.com

Is Your Home Near One of These Stores?

Is a new Trader Joes or WholeFoods moving into your neighborhood?  Then you are in luck!  Not only is it great to shop at them, but data reveals they can boos your homes value!

TJ

You may have heard about the Starbucks Effect, a discovery revealed in the New York Times best seller “Zillow Talk” that shows where the coffee chain offers the biggest boost for home values. Co-authors Spencer Rascoff, Zillow Group CEO, and Chief Economist Stan Humphries didn’t stop there.

In the new paperback edition of “Zillow Talk: Rewriting the Rules of Real Estate,” a bonus chapter reveals a similar phenomenon with specialty grocery stores. Between 1997 and 2014, homes near Trader Joe’s and Whole Foods were consistently worth more than the median U.S. home. By the end of 2014, homes within a mile of either store were worth more than twice as much as the median home in the rest of the country.

What Happened to Rates Last Week?

Mortgage backed securities (FNMA 3.00 MBS) lost -60 basis points (BPS) from last Friday’s close which caused fixed mortgage rates to move higher from the prior week. It was our third straight week of declines in MBS (higher rates).

Domestically, there was very little in terms of economic releases or Treasury auctions that had any real influence on MBS pricing and therefore rates. Our Treasury Department auctioned off 10 year notes and 30 year bonds, both went off at a much higher rate than the auctions in February. It didn’t move the needle on mortgage rates but it means that we just rolled over a portion of our deficit at higher rates.

Texas Tea, Black Gold: WTI Oil prices continued the single biggest factor in pricing for the week as WTI Oil moved from a low of $36.09 on Monday to a high of $39.02 on Friday. That is a $3 swing in pricing. Why is this such a big factor in MBS pricing? Because it is a proxy for future inflation and therefore future Fed rate hikes. In February, WTI Oil hit $26.11. If Oil hits $45 in the next couple of months, then that would be a 73% increase! And that certainly can have a major influence on Fed policy.

Wholesale Inventories: Were much stronger than expected, coming in at +0.3% vs est of -0.2%. This is the first reading for January and will cause many to upwardly revised their 1st QTR GDP estimates.

Jobs, Jobs, Jobs: The Labor Market Conditions Index dropped from -0.9 in January down to -2.4 in February. This is based upon 19 labor market indicators that are already out in the market place. Makes you wonder how this is weighted given the strength in just above every other labor indicator.

Consumer Credit: Consumers added another $10.5 billion in debt in January but that is less than market expectations of $16.5B and is a much slower pace than December’s $21.3B. When you strip out auto and student loans and focus on revolving (Credit card) debt (as a proxy for Retail Sales), it slipped $1.1B. This is showing weakness in the consumer sector.

Across the Pond:
ECB: The European Central Bank took the following action last week:
– Increased the amount of their monthly asset purchase volumes from the current level of 60 billion euros to 80 billion euros. This will run until March 2017 but can be extended if conditions warrant it.
– They lowered their key interest rate from 0.05% down to 0.00%
– They lowered their deposit rate from -0.3% down to -0.4%
– They lowered both of their growth and inflation forecasts for 2016 through 2018
During the live press conference, President Mario Draghi said that he saw no reason for further rate cuts.

What to Watch Out For This Week:

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The above are the major economic reports that will hit the market this week. They each have the ability to affect the pricing of Mortgage Backed Securities and therefore, interest rates for Government and Conventional mortgages. I will be watching these reports closely for you and let you know if there are any big surprises.

It is virtually impossible for you to keep track of what is going on with the economy and other events that can impact the housing and mortgage markets. Just leave it to me, I monitor the live trading of Mortgage Backed Securities which are the only thing government and conventional mortgage rates are based upon.

Brought to you by:

Taff Weinstein
Broker/Owner
Office: 832-794-2136
Cell: 832-794-2136
taff@firstimperialmortgage.com

First Imperial Mortgage
3409 Morrison St
Houston, TX 77009
NMLS 225846

www.firstimperialmortgage.com

Copyright © 2016 Powered by www.MBSauthority.com

House Flipping Hits 10Y High

Rising home prices are bringing more house flippers out of the woodwork. The number of active home flippers last year was the highest in nearly a decade, and it is only growing.

Nearly 180,000 family homes and condos were flipped in 2015, according to RealtyTrac. A flip is defined as a home that is bought and sold again within the same 12 months. Flips made up 5.5 percent of all sales last year, and that is the first increase in the flip share after four years of shrinking. Flipping increased in 75 percent of U.S. markets, and the profits are growing as well.

This serves an important role in a market with extremely tight inventories.  These homes are revitalized and added to the inventory pool.

Prices are rising fast, not because buyers can afford to pay more but because of extremely short supply of homes for sale, especially on the lower end of the market. Home prices in January were 6.9 percent higher than the January 2015, according to CoreLogic, a higher annual gain than in December. Home flipping can push prices even higher, especially in markets with the tightest inventory.

As confidence in the housing recovery spreads, more real estate investors and would-be real estate investors are hopping on the home flipping bandwagon,” said Daren Blomquist, senior vice president at RealtyTrac. “Not only is the share of home flips on the rise again, but we also see the flipping trend trickling down to smaller investors who are completing fewer flips per year.”

Flippers are watching home prices rise, and in turn seeing returns rise. Homes flipped in 2015 yielded an average gross profit of $55,000 nationwide, the highest for flips nationally since 2005, according to RealtyTrac. The return on investment was close to 46 percent, up from 44 percent in 2014 and up from 35 percent in 2005. 2005 was when flipping was rampant, thanks to super easy credit. Back then, over 8 percent of all sales were flips.

What Happened to Rates Last Week?

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Mortgage backed securities (FNMA 3.00 MBS) lost -33 basis points (BPS) from last Friday’s close which caused fixed mortgage rates to move higher sideways from the prior week.  It was our second straight week of declines in MBS (higher rates).

We had a 76 basis point spread between our lowest MBS pricing (highest rates) on Friday and our highest MBS pricing (lowest rates) on Tuesday, that volatility was mostly due to fluctuations in Oil prices.

Texas Tea, Black Gold:  WTI Oil prices continues to be a major factor in our pricing and rates.  Lower Oil prices are really a proxy now for bond traders to bet/hedge on the timing of the next rate hike by the Federal Reserve.  As Oil stays close to $30 or below, it prolongs our time at these uber low mortgage rates as traders are pricing in zero chance of a rate hike this year due to no inflation.  But as Oil moves towards $35 per barrel, MBS start to sell off as it opens the window (at least in trader’s minds) of a rate hike or two this year.  Last week WTI Oil moved from $32.32 on Monday all the way up to $36.34 on Friday and that was the prevailing force in the downward pressure on MBS trades last week.

Domestic Flavor:
Jobs, Jobs, Jobs:  We had our BIG Jobs Friday.  Here is a break down of each item and its impact on MBS specifically.  Please note: GREEN means its positive for MBS pricing  (lower rates) and RED means negative for MBS pricing (higher rates), Black means Neutral….these colors do not reflect if it is positive or negative for the economy nor the stock/Treasury markets but rather positive or negative for FNMA pricing.
Tale of the Tape:
Non Farm Payrolls (NFP) February 242K vs est of 190K
January NFP was 151K, revised upward to 172K
December NFP was 262K revised upward to 271K
Unemployment Rate 4.9% vs est of 4.9%
Participation Rate was 62.7%, now 62.9%
Average Weekly Hours, was 34.6, now 34.4
Average Hourly Earnings (MOM) -0.1% vs est of +0.2%
Average Hourly Earnings (YOY) was 2.5%, now 2.2%

As you can see by the different colors, this is a mixed bag.  Certainly the fact that more and more American’s are working (NFP gains now average 228K over the past three months) is an overall positive for our economy and the labor market in general.  While the headline Average Hourly Wages (MOM) was weaker than expected…..it was not really that weak.  The overall number only fell 0.3 cents to $25.35 and the private-sector data remained unchanged at $21.32.  And on a yearly basis, wages are still up over 2%.  So..this is slightly weaker than expected wage data…but it is not actually weak data.

ISM Non-Manufacturing: This is by far, more important that the ISM Manufacturing reading as it accounts for almost 80% of our economy. Just like the Manufacturing data, this was a tad better than expected (53.4 vs est of 53.2), so a nice and  healthy level but not by enough to move the needle on pricing.

Manufacturing:  We had two reports hit this morning and both were better than expected.  The Markit Feb PMI reading hit 51.3 vs est of 51.0 and our more closely watched ISM Feb reading hit 49.5 vs est of 48.5.   This was a healthy beat to the upside even though it is still below the 50.0 demarcation. It also was a nice gain over January’s 48.2.  This positive momentum in manufacturing was certainly negative for pricing.

What to Watch Out For This Week:

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The above are the major economic reports that will hit the market this week. They each have the ability to affect the pricing of Mortgage Backed Securities and therefore, interest rates for Government and Conventional mortgages. I will be watching these reports closely for you and let you know if there are any big surprises.

It is virtually impossible for you to keep track of what is going on with the economy and other events that can impact the housing and mortgage markets.  Just leave it to me, I monitor the live trading of Mortgage Backed Securities which are the only thing government and conventional mortgage rates are based upon.

Brought to you by:

Taff Weinstein
Broker/Owner
Office: 832-794-2136
Cell: 832-794-2136
taff@firstimperialmortgage.com

First Imperial Mortgage
3409 Morrison St
Houston, TX 77009
NMLS 225846

www.firstimperialmortgage.com

Copyright © 2016 Powered by www.MBSauthority.com