What Does QE3 Mean to Housing?

by The KCM Crew on September 18, 2012 · 

 

 

Fed Chairman Ben Bernanke announced last week that the Fed would again be pumping money into mortgage-backed-securities as a way to stimulate the economy. The big question for us becomes what impact this will have on the housing market. There is absolutely no doubt that Bernanke had the housing industry in mind while making this decision. In his post meeting news conference Bernanke explained:

“I think that house prices are beginning to rise in some markets, which will encourage people to look at homes, will encourage lenders to make more mortgage loans. I am hoping we will continue to see progress in the housing market. That is one of the missing pistons in the engine here, housing is usually a big part of a recovery process. We haven’t had that nearly to the usual extent. And to the extent that we can support housing I think that would be a very useful outcome.”

How does keeping rates low help the market?

HSH Associates which reports on trends in the mortgage rate environment explains:

“Of all the Fed policies, driving down mortgage rates has arguably been the most successful. Low rates have fostered refinancing, putting money in homeowner pockets and helping to spur consumer spending. Those low rates have enhanced housing affordability, while the steadying aspect of the Fed’s presence in the market has allowed for more of those transactions to complete; in turn, this has helped to firm up home prices. The Fed is trying to cause at least some inflation, namely in asset prices — homes, stocks.”

But what impact will it actually have on home sales?

Keeping interest rates low will definitely help. However, we are not sure it will be a driving force in a housing recovery. Rates are already at historic lows and the challenge to many buyers is availability of mortgage money more than it is the cost of that money (rate). HSH Associates believes:

“Looking across the potential audiences who want to buy homes, can a claim be made that interest rates are an impediment? More likely, credit ruined in the downturn, a lack of income, unemployment or even asset strength are keeping people out of the market. In addition, there is arguably a cohort which cannot participate due to a foreclosure, short-sale or deed-in-lieu effected over the last few years, and there is likely still another group who will not buy a home at all, having watched family and friends suffer mightily with real estate issues and losses in the downturn. In this way, lower interest rates aren’t much of an inducement for a lot of folks, and except at the margins, the change merely enhances the opportunity for people already well-positioned and motivated to buy a home.”

Richard Green, director of the University of Southern California Lusk Center for Real Estate, echoed this sentiment in a recent MarketWatch article:

“While QE3 certainly won’t hurt the housing market, its short-term effect will likely be limited. The constraint that is keeping people out of the housing market is absence of equity. The drop in house prices means that many borrowers are underwater on their houses, and high unemployment has prevented potential first-time buyers from accumulating down payments.”

Keeping rates low can’t hurt the market and perhaps it will encourage some move-up buyers to make the move now. But few believe it will spur a dramatic increase in home sales.

Don't hesitate to call or e-mail me with any of your real estate questions, I would be delighted to help you make the process of buying or selling a home a really smooth one.

If you are thinking of buying a home in Bristol County MA or RI visit www.DistinctiveHomes-NE.com for a free list of homes for sale in Bristol County MA and RI.

If you are thinking of selling your home contact me for a FREE Current Market Analysis and to learn about our Market Plan to get your home SOLD!

Noemi Cardoso
RE/MAX Welcome Home
Cell: 508-558-1945
Home Office (Westport) 774-264-9085
www.DistinctiveHomes-NE.com
noemi@DistinctiveHomes-NE.com

Do National Real Estate Headlines Actually Influence Local Markets?

by The KCM Crew on June 11, 2012

This is a question we are frequently asked. Local real estate professionals know the best information for either buyers or sellers is local market data. However, we must realize that what happens in the national real estate market dramatically impacts regional and local markets. For example:

Are 30 year mortgage interest rates in North Dakota under 4% because of what happened in the their market over the last few years?

Of course not. They benefit from lower rates because of what happened in the national economy (if not the world economy).

Buyers all over the country are concerned about the reports of distressed properties about to come to market and what impact they will have on house values. The truth is only a handful of states will be adversely affected. However, if overall consumer confidence is shaken, every market is impacted. This is why it is important that you work with a real estate professional that understands three things:

1.What the national headlines are saying and why they are saying it
2.What effect the issue may or MAY NOT have on your local market
3.How to simply and effectively explain both of the above to you

Agents who just ignore national headlines are hiding their heads in the sand. Agents who use the headlines as scare tactics to unfairly influence the actions of their customers are engaging in unethical behavior. Agents who take the time to keep abreast of the national real estate issues and are patient in explaining how these issues will impact you in the local market are true professionals.

The first two types of agents could cost you dearly. The last group will maximize the outcome of your real estate transaction – both personally and financially.

Thinking of buying a home in Bristol County in MA or RI? Visit www.DistinctiveHomes-NE.com for all free list of homes for sale in in Bristol County MA and RI.

Considering Selling? Contact me for a free market analysis and to learn about our Market Plan to SELL your home.

Noemi Cardoso
RE/MAX Welcome Home
Serving Westport, Dartmouth, Fall River, MA
Little Compton,Tiverton, RI and surrounding towns.
www.DistinctiveHomes-NE.com

Green Mortgages

by Dean Hartman on June 7, 2012 ·

With spring in full bloom and the landscape at its peak greenness, I was moved to share my thoughts on how smart financing can help the environment. Beyond the paperless mortgage that can save trees, I am talking about two loan products that can finance energy efficient improvements to your home. And both can be done at time of acquisition or during a refinance.

First, we have the tried and true FHA 203K which will finance homes and their renovations up to the local FHA loan limit. In terms of green mortgaging, we have seen borrowers finance $50,000 solar heating and electrical systems and geo-thermal heating and cooling systems which enable homeowners to slash their energy costs and usage. Besides saving the earth’s resources, over time, customers save money. It’s a win/win.

But today, I want to highlight a smaller loan that has been around for a few years, but rarely utilized. It’s called the EEM (Energy Efficient Mortgage). Some of the highlights are:

• § It is available as an add-on to VA and FHA loan products, including 203K, for home purchases and refinances.
• § It allows a borrower to get an additional 5% of the home price (capped at $8,000 for FHA and $6,000 for VA loans) to finance energy efficient improvements.
• § The beauty of the additional funds is that the additional debt incurred in your monthly payment is excluded from your qualifying ratios. The logic is that what will be saved in electric/heating costs will be more than the increased mortgage payment.
• § Logistically, your lender will require an independent certification of projected savings prior to closing, and they will hold the monies in escrow, until the work is completed and inspected. Otherwise, it is a fairly simple program that doesn’t alter your required documents or qualifications.
• § Some of the more typical uses for the money are: replacement windows and doors, increased insulation, upgraded oil burner, conversion to gas heat, central air, sun lights, small solar panels, even energy saving appliances.

Talk to your lender today about the ability to upgrade your home, while benefiting the environment, at the lowest possible interest rates. You’ll be glad you did.

Thinking of buying a home in Westport MA? Visit www.DistinctiveHomes-NE.comfor a free list of homes for sale in Westport MA.

Considering Selling? Contact me for a free market analysis and to learn about our Market Plan to SELL your home.

Noemi Cardoso
RE/MAX Welcome Home
Serving Westport, Dartmouth, Fall River, MA
Little Compton,Tiverton, RI and surrounding towns.
www.DistinctiveHomes-NE.com

Everybody Calm Down! The Sky Is NOT Falling

by The KCM Crew on June 5, 2012 · 2 Comments

After weeks of continuous good news about the housing market, the naysayers jumped all over this month’s Pending Sales Report from the National Association of Realtors (NAR). Pending sales were down from the previous month. This must be proof that all that other positive news on real estate should be ignored – right? WRONG!!

It is true that this month’s numbers were down from last month. However, we must realize we are comparing the numbers to the best month in two years. The numbers are 14.4% higher than the same month last year. Below is a graph showing the pending sales numbers over the last two years. You can decide whether it is showing a recovering market or not.

Noemi Cardoso
RE/MAX Welcome Home
Serving Westport, Dartmouth, Fall River, MA
Little Compton,Tiverton, RI and surrounding towns.
www.DistinctiveHomes-NE.com