Mortgage rates fall to 12-month low – 30-year at 4.37%

U.S. long-term mortgage rates fell this week to a 12-month low, an enticement for prospective homebuyers in the upcoming season.

Mortgage buyer Freddie Mac says the average rate on the benchmark 30-year, fixed-rate mortgage declined to 4.37 percent from 4.41 percent last week. The key 30-year home borrowing rate averaged 4.38 percent a year ago.

The average rate this week for 15-year, fixed-rate loans eased to 3.81 percent from 3.84 percent.

Indications that inflation and economic growth around the world have slowed have been pushing mortgage rates lower, experts say. Increases in home prices have slowed in many areas of the country, and more homes have come on the market.

Along with historically low mortgage rates, those developments are expected to boost this spring’s home buying season.

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Fla.’s housing market: Sales, new listings, median price up at end of 2018

Florida’s housing market wrapped up 2018 with more sales, higher median sale prices and more new listings compared to the year before, according to the latest housing data released by Florida Realtors®.

“Florida’s economy is growing, the jobs outlook remains strong and more people are moving to the Sunshine State,” says 2019 Florida Realtors President Eric Sain, . “And, while mortgage interest rates have fluctuated in recent months, they remain at historically low levels. All of these factors are positive signs for the state’s housing market in 2019.”

Year-end 2018

Statewide closed sales of existing single-family homes totaled 277,827 in 2018, up 2.2 percent compared to the 2017 figure, according to data from Florida Realtors research department in partnership with local Realtor boards/associations.

The statewide median sales price for single-family existing homes in 2018 was $254,505, up 7.2 percent from the previous year. New listings for existing single-family homes rose 6.5 percent in 2018 compared to 2017.

Looking at Florida’s year-to-year comparison for sales of townhouse-condos, a total of 116,706 units sold statewide in 2018, up 4.9 percent from 2017. The closed sales data reflected fewer short sales and foreclosures statewide in 2018 compared to the previous year: Short sales for condo-townhouse properties declined 37.5 percent and foreclosures dropped 33.9 percent; short sales for single-family homes dropped 41.4 percent while foreclosures declined 39.5 percent.

The statewide median price for townhouse-condo properties in 2018 was $185,000, up 7.2 percent over the previous year. New listings for townhouse-condos for the year increased 5.9 percent compared to a year ago.

At the end of 2018 and also for 4Q 2018, inventory for single-family homes stood at a 4-months’ supply, while inventory for townhouse-condo properties was at a 5.7-months’ supply, according to Florida Realtors.

Florida Realtors Chief Economist Dr. Brad O’Connor said Florida’s housing data shows that statewide inventory (active listings) is up, comparing year end 2018 to year end 2017.

“It’s not a significantly huge increase – active inventory is up 13.3 percent in single-family homes and up 8 percent in condo-townhome properties,” he said.

More inventory could help spark sales, bringing back potential buyers who have been waiting on the sidelines.

O’Connor added, “The national housing market forecast (from the National Association of Realtors) for 2019 expects flat growth, in both the condo and single-family categories. Currently, in our Florida forecast model, we’re outpacing the nation in sales and employment growth, so our outlook is probably about 1 percent growth in sales and maybe 3 to 4 percent price growth. Relative to all other areas of the nation, we think Florida is doing really well.”

The interest rate for a 30-year fixed-rate mortgage averaged 4.54 percent for 2018, up significantly from the previous year’s average of 3.99 percent, according to Freddie Mac.

4Q 2018

Statewide closed sales of existing single-family homes totaled 63,483 in the fourth quarter of 2018, up 0.1 percent compared to the year-ago figure, according to data from Florida Realtors research department in partnership with local Realtor boards/associations. Closed sales typically occur 30 to 90 days after sales contracts are written.

The statewide median sales price for existing single-family homes for the quarter was $255,000, up 6.3 percent from 4Q 2017. New listings for existing single-family homes for the quarter rose 5 percent compared to a year ago.

Looking at Florida’s year-to-year comparison for sales of condos-townhouses, a total of 26,069 units sold statewide in 4Q 2018, up 1.9 percent compared to the same period a year earlier. The closed sales data reflected fewer short sales and foreclosures statewide in the fourth quarter compared to the same time a year ago: Short sales for condo-townhouse properties declined 41.2 percent and foreclosures dropped 29.1 percent; short sales for single-family homes dropped 41.6 percent and foreclosures declined 26.5 percent.

The statewide median price for condo-townhouse properties in 4Q 2018 was $184,000, up 5.1 percent over the previous year. New listings for condos-townhouses for the quarter increased 2.9 percent compared to a year ago.

To see the full statewide housing activity reports, go to Florida Realtors Research & Statistics section on Realtors also have access to local market stats (password protected) on Florida Realtors’ website.

© 2019 Florida Realtors®

Fla. PSC says it won’t regulate Tesla’s solar leases

The Florida Public Service Commission (PSC) issued a declaratory statement that affirms Tesla, LLC (Tesla) can offer residential solar equipment leases in Florida with fears that it will be regulated as if it’s a utility.

The declaration removes a cloud hanging over Tesla’s solar-power expansion in Florida, and those homeowners considering the energy-efficient upgrade. As a result, more homes could be sporting solar panels as the company kicks expansion plans into high gear.

PSC rules allow leasing of renewable energy equipment as long as it doesn’t involve selling electricity to customers, although they can benefit from net metering with their utilities. In its declaratory statement, the PSC found that:

  • Tesla’s residential solar equipment lease, through Tesla’s SolarLease, does not constitute a sale of electricity
  • Offering its solar equipment lease to Florida consumers will not cause Tesla to be a public utility under Florida law
  • The residential solar equipment lease will not subject Tesla or its customer lessees to PSC regulations

PSC rules have long allowed leasing of renewable energy equipment, as long as the lessor is not effectively selling electricity to the customer. Homeowners can purchase or lease equipment to generate electricity for personal use and also benefit from interconnection and net metering with their local utility.

In its decision, PSC commissioners agreed for the third time in the past year that a solar equipment lease is not a retail sale of electricity. In 2018, the PSC issued similar declaratory statements for Sunrun Inc., and Vivint Solar Developer Inc.

PSC approval isn’t required for a company to lease solar equipment to Florida residents.

“While today’s declaration is limited to the facts in Tesla’s petition, companies operating under the same facts can rely upon this declaration as well,” says PSC Chairman Art Graham.

© 2019 Florida Realtors®

Spring selling season comes early, groundhog shadow or not

house-with-garage_4460x4460Demand for housing is picking up and housing analysts are pointing to lower mortgage rates as the main reason. The spring buying season may be coming early whether the groundhog saw his shadow or not.

In Coppell, Texas, a suburb of Dallas, real estate pros reported a traffic jam of buyers lined up on the front stairway to get into an open house.

“It kind of caught us a little bit off-guard,” says Laura Barnett, a real estate professional with RE/MAX DFW Associates in the Dallas area, to CNBC, about the sudden uptick in buyer demand. “We actually did get a surge of buyers coming in. And, matter of fact, I worked with two this weekend, one of which is under contract; another is about to be.”

The 30-year fixed-rate mortgage increased for most of 2018 and neared 5 percent, prompting home sales to decrease. However, rates have been moderating in recent weeks and hit a 10-month low today of 4.41 percent. As a result, potential home shoppers are taking advantage.

Mixed with the lower rates, home prices are slowing too. Home prices in December were up 4.7 percent annually, the smallest gain in more than six years, according to CoreLogic, a real estate data firm.

“When you see those numbers coming down, you want to go, ‘OK, this is the time to buy,’” says Celena Vittorio, a home shopper in the Dallas area. “You certainly don’t want to buy at the top of the market.”

Also in buyers’ favor recently: The share of homes with price reductions increased in 39 of the 50 largest markets, an analysis from found. The most expensive markets saw the largest price cuts.

The cities with some of the largest reductions in list prices were in Las Vegas (up 16 percent); San Jose, Calif. (up 9 percent); Seattle (up 8 percent); Orlando, Fla. (up 6 percent); and Phoenix (up 5 percent).

Real estate pros are responding to the increase in traffic by trying to get the homes that were going to wait to list until the spring ready to go to the market earlier.

“We don’t want to miss that opportunity, so we’re trying to get busy with our listings and start getting our listings on the market early,” Barnett told CNBC.

Zillow spends $1M trying to improve its ‘Zestimates’

mindmap-2123973_640Zillow’s estimate of a home’s value, called the Zestimate, can be powerful: Some homeowners track them like a stock, and when it gets to a certain point, they may decide to sell. Home shoppers gauge the estimate against the list price of a home. Others use it just to gawk at their neighbor’s home values.

But it’s far from perfect: In Seattle, the Zestimate is off by a median of 4.7 percent compared to the actual sale price, according to the company – a $35,000 difference on the typical house. Real-estate brokers have long complained that the numbers give sellers, in particular, a distorted view of their home’s true worth.

Now the Zestimate, that little number that appears at the top of every home’s Zillow page and updates daily, is in line to get more accurate.

On Wednesday, the Seattle-based company awarded a $1 million prize to the winners of a public contest to improve its algorithm. The winning team, three guys from Raleigh, Toronto and Morocco who teamed up despite never having met in person, came up with a way to beat Zillow’s own data scientists to a better estimate.

The contest started a year and a half ago with 3,800 teams from 91 countries and was narrowed down to 100 finalists last year. The teams were given seven years’ worth of data on a sample of millions of homes across the country, and were tested to see how closely their estimated values for each home matched up with the actual sale prices of homes that sold in the ensuing months.

Jordan Meyer, the American on the winning team, reduced his workload at his day job as CTO of an analytics company and poured about six hours a day into the contest, communicating with his teammates, Moroccan computer science professor Chahhou Mohamed and Canadian artificial intelligence startup founder Nima Shahbazi, on the messaging application Slack.

Meyer started by finding every data source he could – the exact longitude and latitude of houses could be used to determine the proximity to streets and therefore determine noise near the house. Slight differences in distance from a body of water could influence a home price by thousands of dollars. In the end each home had hundreds of different data points.

But the strategy that set them apart was trying wildly different algorithms and merging the ones that worked together to get the best blended average.

“It was extremely hard,” Meyer said in an interview. He called the process “relentless experimentation” and echoed Shahbazi, who said in a statement: “For every idea that worked, there were a hundred that didn’t work. But we kept going.”

Zillow has slowly improved its Zestimate from a median error rate of 14 percent when it started in 2006 to 5.7 percent when the contest began in mid-2017. It’s now down to 4.5 percent nationally (it’s higher in some cities and lower in others), and once the winners’ tweaks to the algorithm are incorporated, the company expects the error rate to dip to about 4 percent.

“We’re happy with the progress we’re making.” said Stan Humphries, Zillow’s chief analytics officer. “You’re going to get some way off. We do 115 million of these every day,” referring to the number of homes on Zillow with a Zestimate, “so yes, we get concerned when we’re off, and we’re committed to making them even more accurate. This is an important number. The implications of getting it right are really important.”

Humans are still better than machines

Homes nationally sell on average for about 2 percent less than the list price set by brokers, according to data from Redfin. Brokers have access to information that an algorithm often doesn’t – the Zestimate relies on publicly available data and voluntary input from homeowners, which can give an incomplete picture of a house.

“There are way too many factors for a certain algorithm to work,” said Sam Mansour, a managing broker with John L. Scott in Lynnwood. He said he constantly has to battle with clients who cling to their Zestimate. “I’ve been to homes and people say ‘my Zestimate is worth X amount,’ and I’m like, ‘no, no.’”

He said he’s also heard of homeowners who use their Zestimate, and the company’s one-year forecast of their home value, to justify how much they’d like to borrow against their home. (Zestimates aren’t used in official proceedings, like a home appraisal or a home-equity loan.)

Mansour said the biggest factor a computer can’t track is the emotional appeal of a home, which can vary wildly from buyer to buyer and is a primary driver in how much people offer. And certain attributes that get plugged into algorithms are going to be weighed differently by various buyers – a large lot might appeal to some, but to others, it just means extra yard work.

Sometimes Zillow is really off – the median error rate of 4.5 percent nationally means half of home values are wrong by more than 4.5 percent.

Zillow says about 1 in 8 Zestimates winds up being wrong by at least 20 percent. That includes the 2016 home sale made by Zillow CEO Spencer Rascoff – who sold his Seattle home for 40 percent less than his Zestimate. In some counties where public data isn’t great or there aren’t many homes, Zestimates don’t exist, or the median error rate can be above 10 percent.

Zillow is the most-clicked real estate site in the nation and was the first to offer a home-value estimator, but these days other websites like Redfin and also offer their own home-value estimates.

The winners of the prize agreed to split their $1 million share evenly. As for what Meyer will do with his cut?

“I’ll be investing in real estate for sure,” he said.

© 2019 The Seattle Times, Mike Rosenberg. Distributed by Tribune Content Agency, LLC.

DeSantis proposes full funding for affordable housing

Florida Gov. Ron DeSantis proposed his $91.3 billion budget on Friday and wants all doc stamp money rolled into the State and Local Government Housing Trust Funds to be used for affordable housing – a move strongly backed by Florida Realtors in an earlier meeting with the governor’s staff.

Florida Realtors considers full funding a top legislative priority. These trust funds are needed to address Florida’s affordable housing crisis.

For the past several years, however, some of the housing trust fund money has been used for other purposes.key-2323278_640

As advocates for affordable housing, Florida Realtors recently met with top officials in the governor’s office to discuss the housing trust funds and the need to use it for state and local housing programs. Florida Realtors is a leading member of the Florida Housing Coalition, a nonpartisan collection of 30 diverse statewide organizations.

“Florida Realtors met with the governor’s chief of staff and legislative affairs director to ask that his upcoming budget recommendations include full funding from the trust funds for affordable housing programs,” says 2019 Florida Realtors President Eric Sain. “Our representatives left the meeting very encouraged by the feedback they received from the governor’s staff, and we’re grateful that full funding made it into Gov. DeSantis’ final budget proposal.”

The governor’s annual proposed budget is released each year prior to the start of the Florida legislative session. While the Florida Legislature isn’t required to follow the governor’s recommendations, the budget serves as a framework lawmakers can use to develop and pass a budget that the governor will sign.

In addition to full funding for the affordable housing trust funds, DeSantis’ budget focuses on improvements to the state’s aging transportation infrastructure and additional funding for the Everglades and other water-quality issues.

Florida has many programs to help first-time homebuyers

U.S. News & World Report issued an extensive overview of programs in Florida that can help first-time homebuyers secure their first house – and in some cases, they don’t even need to be first-timers. A few programs consider anyone who has not owned a home within the past three years a first-timer.

There are three broad categories of aid for first-time buyers: home loan programs, some type of financial help to allow them to take out a mortgage, and buyer education programs that can teach them the basics of homeownership and help them understand the other aid packages

Many buyers and industry experts understand the national programs that can help first-timers – Federal Housing Administration (FHA) loans, Veteran Affairs (VA) loans and other programs – but the state also has the Florida Housing Finance Corporation (Florida Housing) that the Florida Legislature created to help provide affordable housing options statewide.

“Florida Housing’s programs provide assistance to eligible homebuyers by offering low-cost, 30-year, fixed-rate mortgages together with downpayment and closing cost assistance,” according to Taylore Maxey, press secretary for Florida Housing.

For an overview of first-time buyer options, read the full article in U.S. News & World Report.

Mortgage rates hit 10-month low

U.S. long-term mortgage rates fell this week to a 10-month low, spurring on potential homebuyers for the upcoming

Mortgage buyer Freddie Mac said Thursday the average rate on the benchmark 30-year, fixed-rate mortgage eased to 4.41 percent from 4.46 percent last week. Despite the declines in recent weeks, home borrowing rates are still above last year’s levels. The key 30-year rate averaged 4.32 percent a year ago.

The average rate this week for 15-year, fixed-rate loans declined to 3.84 percent from 3.89 percent.

Increases in home prices have slowed in many areas of the country, and more homes have come on the market. Those developments, along with historically low mortgage rates, should give a boost to this spring’s home buying season, experts say.

“The U.S. economy remains on solid ground, inflation is contained and the threat of higher short-term rates is fading from view,” said Freddie Mac chief economist Sam Khater.

The Federal Reserve held its benchmark interest rate steady last week and sent its strongest signal to date that it sees no need to raise rates anytime soon. Its message ignited a rally on Wall Street, which cheered the prospect of continued modest borrowing rates for the near future.

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.

The average fee on 30-year fixed-rate mortgages fell this week to 0.4 point from 0.5 point. The fee on 15-year mortgages held steady at 0.4 point.

The average rate for five-year adjustable-rate mortgages dropped to 3.91 percent from 3.96 percent last week. The fee was unchanged at 0.3 point.

Florida Sees More Out-Of-State Buyers From High-Tax States

NEW YORK – Feb. 5, 2019 – The massive tax reform package signed in December 2017 changed things. With a new state and local tax cap of $10,000, high-income homeowners in high-tax states such as New York found themselves facing a notably bigger tax burden than they once did.

However, that makes low-tax states, such as Florida, more attractive.

New York Gov. Mario Cuomo is now facing a $2.3 billion budget deficit that he says, in part, is due to an exodus of homeowners seeking a better tax picture – and he specifically noted that many New Yorkers unhappy with the new tax laws are moving to South Florida.

The Wall Street Journal, citing a Zillow study, says “preliminary data show a jump in Florida home purchases by buyers from high-tax states,” and that “home values in lower-tax areas have been rising faster than those in places where limiting the ability to deduct high state and local taxes eroded some of the savings from the federal tax reduction.”

Jonathan Miller, a real estate appraiser who focuses on the South Florida market, says he’s “starting to see New Yorkers as Florida’s new foreign buyer. … If they were already on the fence, I think the tax law has changed the calculus for some.”

According to July 2017-2019 Census data, Florida had the nation’s highest level of net domestic migration, while New York lost the most residents.

Source: The Wall Street Journal, Laura Kusisto, Arian Campo-Flores and Jimmy Vielkind

Government Shutdown and The Real Estate Market

One of the biggest questions regarding the shutdown and how it will affect housing has revolved around the mortgage market, specifically prospective buyers’ access to new home loans. After all, more than 90 percent of all loan activity is underwritten, insured, or owned by the government and its affiliated entities.

Initially at least, the mortgage market is likely to be only minimally impacted. New loans will continue to push through most government agency pipelines. What will change is how long the process takes, as many agencies expect to experience delays.

Mortgages purchased and securitized by Fannie Mae and Freddie Mac will be unaffected because their operations are paid for by fees charged to lenders. And the Department of Veterans Affairs will continue to guarantee mortgages for Americans that have served in the military since these loans are funded by user fees as well.

But if the government shutdown of 1995 – 1996 is any indicator, the process will take longer than usual. “Loan Guaranty certificates of eligibility and certificates of reasonable value were delayed,” the VA warned in its September 25th contingency plan.

Where there has been mounting concern is the Federal Housing Administration, which currently endorses about 15 percent of the entire single-family mortgage market. However, the FHA’s Office of Single Family Housing will remain open for business, although with a smaller staff.

“FHA will be able to endorse single family loans during the shutdown. A limited number of FHA staff will be available to underwrite and approve new loans,” the HUD report states. In other words, other lenders’ loans will continue to be insured and some in-house lending will continue to take place at a reduced rate.

The FHA’s single-family loan operations are funded through multi-year appropriations, meaning their budget is not tied to the government’s standoff over funding for the new fiscal year that starts in October. On the other hand, what will be more affected is the agency’s Multifamily Housing Office, which is funded through yearly appropriations.

“Because we are able to endorse loans, we don’t expect the impact on the housing market to be significant, as long as the shutdown is brief,” continues the HUD report. “If the shutdown lasts and our commitment authority runs out, we do expect that potential homeowners will be impacted, as well as home sellers and the entire housing market.”

One government lender that will indeed suspend its home loan activity, however, is the Department of Agriculture. The USDA says that no new housing loans or guarantees will be issued through its Rural Development programs in a shutdown. The department also warns that such a scenario could cause “a setback in construction start-up,” and if the shutdown lasts for an extended period, “a substantial reduction in housing available in rural areas relative to population.”

“The government doesn’t generally approve loans, they basically just insure them,” says Don Frommeyer, president of the National Association of Mortgage Brokers and a vice president at Amtrust Mortgage Funding. “For the most part you aren’t going to see much of a hit in the mortgage market unless it goes for a long period of time.”

If it does stretch on, he adds, the worry will be what mortgage rates do in a market shrouded in fiscal uncertainty and how that will affect the home buying, especially in light of recent rate spikes.

Home lending aside, many economists and real estate experts are keeping a close watch on how Americans will react to this shutdown. “Administratively everything should keep moving along, but it’s more about the confidence of consumers and whether they perceive that the government shutdown could lead to a recession,” says Lawrence Yun, chief economist at the National Association of Realtors.

Moody’s Analytics chief economist Mark Zandi recently told the Senate Budget Committee that a partial shutdown could shave as much as 1.4 percentage points off of fourth quarter economic growth if it drags on for several weeks.

Americans’ confidence in their ability to buy and sell homes hit a record high in May, according to a Fannie Mae survey. Since then, as mortgage rates jumped more than a percentage point, that confidence level has plateaued. If prospective homebuyers fear that the country’s economic recovery will stall, or worse slip back into recession, they will pull back on purchases, worries Yun.

“Home sales is always the first housing variable that changes so one would see sales declining and that would naturally lead to more inventory on the market and eventually put pressure on prices,” he says. But that would be a worst-case scenario based on a long-term shutdown.

Jed Kolko, chief economist at Trulia, notes that if the shutdown lasts longer than a few days, the first places to feel the impact will be local economies with large concentrations of federal government workers. Metro areas like Washington, D.C. and Bethesda, Md., where 19 percent and 13 percent respectively of total local wages go to federal employees, would be the first to feel the negative effects of unpaid furloughs and with them, tightened consumer spending and weakening local economic growth. Though not all will be equally affected, other metro areas like Virginia Beach, Va., Honolulu, Hawaii, and Dayton, Ohio are areas that Kolko is keeping an eye on: “Whether there is a big effect depends on how long the shutdown lasts, how long people think the shutdown lasts, and whether people get back-pay. All those things matter for the impact.”

Still others are worrying even more about the next fiscal standoff, in mid-October, surrounding the debt ceiling debate and its accompanying threat of debt default by the U.S. ”With the threat of an impending partial government shutdown and yet another battle over the nation’s debt ceiling, in particular, we are really messing with fire right now—even if it doesn’t seem to bother some legislators,” says Stan Humphries, chief economist at Zillow.

“But the effects of a government default associated with the impending debt-ceiling deadline would be more pronounced because of its greater impact on domestic and international markets. This will rattle consumers and investors alike, slow down the overall economic recovery and further slow the housing recovery, which is already undergoing a moderation in the pace of home value gains due to rising mortgage rates,” he warns

Source: Forbes,