The New Mortgage Kings

More buyers are bypassing big, established banks and turning to 

a growing subset of specialized lenders to obtain amortgage. 

Last year, a “nonbank” called Freedom Mortgage originated $51.1 billion in home loans, more than Citigroup Inc. and Bank of America Corp., according to research from business news publication Inside Mortgage Finance.

Freedom has risen from being the 78th largest mortgage lender in the U.S. in 2012 to the 11th largest today.

Nonbanks have re-emerged since the last housing crisis and are taking more business from traditional banks, now accounting for 52 percent of U.S. mortgage originations—up from 9 percent in 2009—according to Inside Mortgage Finance.

Six of the 10 largest U.S. mortgage lenders today are nonbanks.

Larger banks have been pulling away from the general mortgage market and have placed a greater focus on consumers with more financial stability. Nonbanks tend to focus on serving first-time buyers and moderate-income families.

Nonbanks also tend to take short-term loans from other banks to fund their lending, and some industry analysts are concerned that these entities could overextend themselves—as many did a few years ago. “As long as the good times roll on, it’s fine,” Ed Pinto, co-director of the Center on Housing Markets and Finance at the American Enterprise Institute, told The Wall Street Journal.

“But all I can say is, we’re in a boom, and you cannot keep going up like this forever.”

Quicken Loans has emerged as the largest nonbank. The top mortgage lenders, by originations, for the first half of 2018 are:


Since the crisis, banks have pulled away from mass-market mortgages to focus on wealthier consumers.

Today, nonbanks like Freedomoften represent the only route for first-time buyers and moderate-income families to get a mortgage.

Post crisis regulations curb bank and nonbank lenders alike from making the “liar loans” that wiped out many lenders and forced a wave of foreclosures during the crisis.

What worries some industry participants is that little has changed about nonbank lenders’ structure.

While consumer advocates have voiced criticism of Freedom, some also say the company plays an important role in offering loans to minorities and moderate-income borrowers.

“They work directly with the clients to make sure that what they’re offering matches the clients’ needs,” said Andrea Haughton, director of homeownership at the nonprofit Community Housing Innovations, “while a lot of mortgage lenders just offer a product.” 

Selling or Buying doesn’t have to be a huge undertaking, but it’s one where details really matter. When you’re working with real estate professional Carriene Porter of Precision Realty & Associates, you’re guaranteed to get the expertise and advice you need to Sell or Buy your home. If you prefer a more personal touch, CALL 801-809-9866 today.  


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Source: Realtor.com

Are Quick Sales Becoming the Norm?

Amid strong demand compared to homes for sale, 

REALTORS® reported that properties were typically on the market for 27 days, a shorter time compared to one year ago (30 days) and about the same level during the prior month (26 days), according to the  July 2018 REALTORS® Confidence Index Survey.

During the May–July 2018,properties typically sold within one month in 32 states and in the District of Columbia, with properties selling most quickly in the D.C. metro area (17 days),Utah (19 days), Colorado, Idaho, Michigan, Ohio, South Dakota, and Washington (20 days). 
Another indicator of how quickly properties are selling is the days on market on Realtor.com.

In 381 out of 500 metro areas tracked by Realtor.com (76 percent) typically stayed on the market for fewer days in July 2018 compared to their median listing time one year ago,

Including in high price areas such as Jose-Sunnyvale-Sta. Clara, CA; San Francisco-Oakland-Hayward, CA; Los Angeles-Long Beach Anaheim, CA; San Diego-Carlsbad, CA; Bridgeport-Stamford-Norwalk, CT ; and New York-Newark, Jersey City, NY-NJ-PA. The decline in days on market in many areas indicates that demand is still broadly strong, with demand outpacing homes for sale.

However, there were fewer metro areas that had year-over-year faster selling timescompared to July 2017 (395 metros). Metros where properties typically stayed much longer on the market longer in July 2018 compared to one year ago include Vallejo-Fairfield, CA; Madera, CA; Kennewick-Richland, WA; and Bend-Redmond, OR.  

Scroll down the list of metro areas in the interactive table below or hover over the map to view the median number days properties were listed on Realtor.com in July 2018 and one year ago.

Selling or Buying doesn’t have to be a huge undertaking, but it’s one where details really matter. When you’re working with real estate professional Carriene Porter of Precision Realty & Associates, you’re guaranteed to get the expertise and advice you need to Sell or Buy your home. If you prefer a more personal touch, CALL 801-809-9866 today. 
  


#RealEstateForSale #Homeownership #UtahRealEstate 

New Generation of Homebuyers?

Nearly 100,000 members of Generation Z own a home 

(they’re 23 and younger), The competition for first-timehomebuyers is about to heat up. Gen Z is planning on buying a home, according to a report from PropertyShark.

According to PropertyShark, 83 percent of of Generation Z, those born after 1995, are planning on buying a home in the next five years.

Like millennials before them, Gen Z’s top obstacle is college debt. Half of the millennials and Gen Z alike are still renters, with student debt holding many millennials back from saving for a down payment.

Gen Z is still set to become the biggest competitor in the housing market for millennials. Currently, millennials are the most likely group to buy a home in the in the next five years, with 87 percent of millennials planning on buying in that time frame. Gen Z is optimistic about home buying.

Key takeaways:

• Gen Z has its eye on home ownership, with 83% planning on buying a home within the next 5 years
• College debt is the #1 obstacle towards homeownership for Millennials and Gen Z
• Gen X chooses intergenerational living to care for relatives more often than any other generation
• Gen Z is willing to compromise on almost anything to keep costs down – but dreams of lots of space and amenities
• Gen Z to pose serious competition to Millennials on the real estate market
• Millennials are more realistic about their means, and the most pessimistic about the prospect of homeownership

There are already around 100,000 Gen Z homeowners, with only 1.2 percent of these young owners 60 days late on their mortgage payments according to data from MarketWatch, compared to 1.6 percent of Boomers and Millennials and 2.3 percent of Gen X mortgage holders.

Gen Z’s optimism extends to home size. When asked what they would be willing to compromise on when buying a home, space was the least likely aspect for Gen Z respondents to give up. Millennials prized location more than anything else, but Gen Z are more willing to sacrifice an easy commute for space and amenities.

Like millennials, Gen Z is moving to urban areas, however, most prefer suburbs over the urban centers, with 60 percent preferring to move to a suburb and just 30 percent preferring urban areas. This still means millennials and Gen Z alike are shunning the rural and small town life.

Additionally, Gen Z is willing to take on more challenging home purchases, willing to buy fixer uppers if it means buying a larger home at a more affordable price. PropertyShark notes that this may be due to the large number of Gen Z the hardships among older siblings or even parents during the recession years.
Selling or Buying doesn’t have to be a huge undertaking, but it’s one where details really matter. When you’re working with real estate professional Carriene Porter of Precision Realty & Associates, you’re guaranteed to get the expertise and advice you need to Sell or Buy your home. If you prefer a more personal touch, CALL 801-809-9866 today. 

 #RealEstateForSale #Homeownership #UtahRealEstate

Find the full report from PropertyShark here.

Homes Competition Cools Down

After seeing one of the most competitive home buying in 2017, 

homeowners have reported a lighter, less competitiveseason in 2018, according to a survey by ValueInsured.

According to the survey, 48 percent of hall homeowners reported noticing lighter open-house traffic and a less competitive homebuying season in their neighborhood compared to 2017.

In California, which was one of the hottest housing markets last year,  54 percent of all homeowners reported lighter homebuying demand, with 56 percent homeowners in Colorado and 53 percent in New York concurring with their counterparts in the Golden State.

The survey indicated that one of the reasons for the cooling market was that after three years of double-digit price gains in the nation's top housing markets, wage growths were not keeping pace with the prices.

'While buyers have been conditioned to hurry up and make an offer, even sight-unseen, in recent years, some may now step back onto the sidelines to wait and see if – and how far – home prices could get cut before they jump back in,' the survey said.

Citing various recent reports, the survey said that some of the hottest markets of 2017 had seen the most significant signs of cooling down this year. In San Diego, ValueInsured said, 20 percent of all listed homes had price cuts.

In Seattle, where bidding wars had become common over the past three years, home prices saw a steep decline from their median prices. It also indicated that in Dallas, 19 percent of all listed homes had seen their prices cut at least once in June.
Home prices may indeed have reached their tipping point. According to a recent report by First American, Home price appreciation is slowing and may be close to a “tipping point.”

“We’re seeing the first indications that price appreciation may be slowing, but the underlying fundamental housing market conditions support a natural moderation of house prices rather than a sharp decline,” says First American Chief Economist Mark Fleming.

Selling or Buying doesn’t have to be a huge undertaking, but it’s one where details really matter. When you’re working with real estate professional Carriene Porter of Precision Realty & Associates, you’re guaranteed to get the expertise and advice you need to Sell or Buy your home. If you prefer a more personal touch, CALL 801-809-9866 today. 

 #RealEstateForSale #Homeownership #UtahRealEstate

Is Home Price Appreciation at the Tipping Point?

Is the Housing Market Shifting?

To Favor Buyers? In recent years, home prices have gone up, up, 

and up. In this 'seller's market,' home sellers can expectfull–price and even over–asking–price offers, and often experience bidding wars among hopeful buyers to drive their sales price even higher.

That tide may be turning for some sellers.

Approximately 14% of nationwide listings reduced their asking price in June 2018 — up from a low of 11.7% at the end of 2016. Price cuts are concentrated at the most expensive price–points in markets that have seen out sized price gains in recent years.

In fact, growth in home prices is slowing in nearly half of the 35 largest U.S. metropolitan markets, with Sacramento and Seattle reporting the greatest slowdown since the beginning of the year.

All Real Estate Is Indeed Local

Forecast for 2018 This year both household growth and net in-migration in Salt Lake County are projected to be at record levels. Net in-migration of 6,900 individuals and households growth of 8,500 are expected.

This level of growth will support strong demand for housing. Demand will also be given a boost by buyers jumping into the market hoping to beat higher interest rates.

These demand conditions will push total sales above 18,000 units, but it is unlikely that they will break the all-time record of 18,987. Strong demand will put upward pressure on prices, but another year of a double-digit increase is unlikely. Prices will be up by 7-8 percent in 2018.

The median sales price of a single-family home will be near $350,000 and the total value of residential sales will be $6.6 billion, well above the $5.9 billion in 2017. Finally, total residential real estate commissions will be close to $400 million up from $360 million in 2017.

Outlook: What Will the U.S. Real Estate Market Do in 2019?

We’ve passed the midpoint of 2018, which means some home buyers are starting to look ahead to next year. And a lot of them share the same questions: What will the real estate market be like in 2019? Will home prices keep rising, level off, or next year? Will it be a buyers’ or sellers’ market in 2019?

Tight supply and strong demand have boosted home prices in housing markets across the country, while presenting challenges for buyers. Mortgage rates rose steadily during the first part of 2018, and then leveled off during the early summer. That’s where we are now, as of July 2018. But what’s over the horizon? While no one can predict future housing conditions with complete accuracy, we can make a few educated guesses. Here are four of them.

1. We could see an increase in new-home construction.

We’ve seen a recent uptick in building permits nationwide, which could lead to a much-needed increase in new-home construction in 2019.

In a June 2018 report, the National Association of Home Builders stated: “Over the first four months of 2018, the total number of single-family permits issued nationwide reached 279,302. On a year-over-year basis, this is an 8.4% increase over the April 2017 level of 257,719.”

But there’s a pretty long lag time between the filing of a construction permit and the completion of the project. So the U.S. real estate market in 2019 will probably continue to suffer from supply shortages, with not enough homes listed for sale to satisfy demand from buyers. Which leads to item #2 below.

2. Most markets will still favor sellers over buyers.

Inventory shortages affected many housing markets across the country during 2017 and 2018. And this will likely continue, to some extent, in 2019 as well. Limited supply is also one of the reasons for prediction #4 below. An imbalanced supply-and-demand picture will continue to put upward pressure on home prices in 2019.

Of course, all of these trends can vary from one area to the next. Some real estate markets across the U.S. are more “balanced” than others, with enough supply to meet demand. Most cities, however, are experiencing low levels of inventory at present. The tightest markets are in the west — California, Washington and Oregon. But nearly every state is touched by this.

3. Mortgage rates could approach 5%, for a 30-year loan.

Here’s the short version: Mortgage rates are higher now than they were at the start of this year, and experts are predicting they’ll climb even higher by the end of 2018.

Here’s the back story: The average rate for a 30-year fixed mortgage hovered below 4% for much of 2017. Then, at the start of 2018, it began a steady upward climb that lasted for three months. When this article was published, on July 6, 2018, the average 30-year mortgage rate was 4.52%. That was an increase of 57 basis points (0.57%) from the first week of January.

So clearly, rates are higher now than at the start of the year. The question is, what might they do going forward? And what will the real estate market do in 2019 if mortgage rates climb even higher?

What might the real estate market do in 2019, in response to rising rates? Well, assuming that event actually happens, we could see a decline in home purchases in the months ahead. But we don’t expect it to have a major impact on real estate sales.

The economy is strong and employment is high, so there is steady demand for homes in most housing markets across the country. A modest rise in mortgage rates probably wouldn’t do much to dampen it.

4. Home prices will continue rising in most U.S. cities.

Given the current supply-and-demand situation, it appears likely that home prices in most U.S. cities will continue to rise throughout 2019. This would be the continuation of an ongoing trend, rather than a new development.

The median home price in the U.S. rose by 8.1% over the past year. They predicted that prices would rise by 6.5% over the next 12 months. This forecast was issued in July 2018 and therefore extends into the summer of 2019.

Of course, this too varies by region. Some cities might experience relatively small gains, while others could see a large jump in home prices. The biggest gains will likely be recorded in real estate markets with strong demand and short supply, like those in the Pacific Northwest and a few other areas.

Selling or Buying doesn’t have to be a huge undertaking, but it’s one where details really matter. When you’re working with real estate professional Carriene Porter of Precision Realty & Associates, you’re guaranteed to get the expertise and advice you need to Sell or Buy your home. If you prefer a more personal touch, CALL 801-809-9866 today. 

 #RealEstateForSale #Homeownership #UtahRealEstate

Mortgage Rates Tick Up Again

Fannie, Freddie Start a Second Decade in Limbo, 

Mortgage rates rose  for a second week, buoyed by a selloff in the bond market, even as housing faces a grim reminder of unfinished work in the mortgage market.

The 30-year fixed-rate mortgage averaged 4.54% in the Sept. 5 week, according to Freddie Mac’s weekly survey, up two basis points. The 15-year fixed-rate mortgage averaged 3.99%, up from 3.97%. The 5-year Treasury-indexed hybrid adjustable-rate mortgage averaged 3.93%, up eight basis points.

Those rates don’t include fees associated with obtaining mortgage loans.

Mortgage rates follow the path of the benchmark U.S. 10-year Treasury note. Bond prices have ticked down, pushing yields up, as the rosy economic data of the past week made safe-haven assets less attractive.

Thursday is an auspicious anniversary for Freddie and its counterpart, Fannie Mae. It’s 10 years to the day since the United States government hustled the two companies, on the brink of a liquidity crisis, into state control.

That arrangement, known as conservatorship, was meant to be temporary, until Congress found a permanent, stable path forward. But that hasn’t happened. Still, many observers of the two enterprises have argued that over the past decade, they’ve reformed themselves into the staid, dependable guarantors that the American mortgage market has long needed, with no support from Washington. Don't look now, but Fannie Mae and Freddie Mac are becoming boring utilities.

Fannie and Freddie help the housing market by buying mortgages from banks and other lenders, enabling those financial institutions to free up their balance sheets for more lending. The enterprises shed their own risk by, among other things, selling securities to investors. More certainty — and more capital — would help the two companies, and might in turn bolster the housing market, which is flagging.

In a release, Sam Khater, Freddie’s chief economist, noted that interest rate rises, even by just a few basis points, erode affordability in a market that’s already stretched thin.

The 30-year fixed-rate mortgage inched higher for the second straight week.

Borrowing costs may be slowly on the rise again in coming weeks, as investors remain optimistic about the underlying strength of the economy. It’s important to note that mortgage rates are now up three-quarters of a percentage point from last year and home prices – albeit at a slower pace.

The good news is that purchase mortgage applications have recently rebounded to above year ago levels.

Selling or Buying doesn’t have to be a huge undertaking, but it’s one where details really matter. When you’re working with real estate professional Carriene Porter of Precision Realty & Associates, you’re guaranteed to get the expertise and advice you need to Sell or Buy your home. If you prefer a more personal touch, CALL 801-809-9866 today. 

 #RealEstateForSale #Homeownership #UtahRealEstate #Mortgage

Get Loan Approval With Lower Credit

FHA is making more mortgages available to applicants with risky 

debt profiles, Is it easier today for home buyers with a high debt ratio and subpar credit scores to qualify for a mortgage than it has been in years? And if so, what might that mean for first-time and repeat buyers who are struggling with credit and debt issues but still hope to buy a home?

New loans with FICO scores below 700 — including some in the rock-bottom 400s and 500s — have increased from 21.9 percent of the market in 2009 to just under 30 percent (29.7 percent) last year, according to FICO researchers. (FICO scores range from 300, indicating severe credit-history problems and high risk of default, to 850, where the probabilities of missed payments or default are extremely low.)

When the Federal Reserve recently polled senior bank executives on whether they’ve been loosening credit criteria for home-mortgage applicants, most bankers said, “No way, not us.” They’ve kept their rules tight to avoid the problems the lending industry experienced in the housing bust of the past decade. Studies by the Urban Institute’s Housing Finance Policy Center have estimated that lenders’ historically strict underwriting standards have prevented millions of would-be buyers from becoming homeowners. Researchers said that between 2009 and 2014, 5.2 million mortgages were “missing” — that is, they would have been made if lenders had relaxed their tough post-recession requirements.

But there’s new statistical evidence that, at least in some areas, standards have been easing. A study conducted by credit-score developer FICO and released in August found that credit scores for new mortgages have been ping.

[Frozen credit files can slow the mortgage process]

New mortgages are being approved with lower credit scores, and FHA loans appear to be leading the shift, according to studies by credit developer FICO and other entities. Underwriting criteria seems to have eased, and a broader section of consumers are obtaining mortgages as a result,” according to FICO’s report. 

So where has the easing been occurring?Conventional mortgage approval requirements haven’t budged much at the giant investors Fannie Mae and Freddie Mac, both of which were bailed out by the federal government 10 years ago. Although minimum down payments for some borrowers have been reduced in the past two years and debt-ratio rules have been relaxed a smidgen, there has been virtually no decrease in average credit scores for home-purchase loans, according to monthly data compiled by software company Ellie Mae. Nor have there been statistically noteworthy increases in applicants’ average debt ratios at Fannie and Freddie.

[FICO shows mortgage applicants how to improve their credit scores]

New loans for borrowers with FICO scores reaching as low as the 400s jumped from 21.9 percent in 2009 to 29.7 percent last year, according to the study. FICO scores range from 300 to 850. 

From January to March of this year, borrowers who were approved for FHA loans—which offer low down payment options for first-time home buyers—had an average credit score of 672, according to FHA data. During that same period in 2011, the average credit score for an FHA borrower was 701. FHA borrowers also have had higher debt-to-income ratios in recent years. Debt-to-income ratios measure monthly household income against other debt, such as credit cards, auto loans, and personal loans.

But loans insured by the Federal Housing Administration appear to be a strikingly different story. From January through March of this year, the average credit score for new-home purchase loans was 672, according to FHA data. By contrast, the average was 701 during the same period in 2011. Refinancings where borrowers replace their existing FHA loans with new ones carried average FICO scores of 709 in mid-2012; earlier this year, that had plummeted to 661.

There has also been a big increase in FHA loans with high debt-to-income ratios (DTIs) within the past several years. DTIs are a crucial measure of home buyers’ ability to repay their loans. They weigh monthly household income against ongoing bills for credit cards, auto loans, personal loans and other obligations such as child support and alimony, plus mortgage payments. The heavier your monthly debt obligations, the more likely you are to go delinquent on your new mortgage.

Between January and March of 2018, 1 of every 4 FHA loans had a DTI of more than 50 percent, according to the latest data available from FHA. As recently as 2013, just 12.7 percent of approved new FHA applications carried such a high debt load. In the first quarter of this year, almost 30 percent of new FHA borrowers had DTIs between 43 percent and 50 percent.

What does this mean for buyers who can’t meet the credit-score and DTI standards needed for most conventional loans? The good news is that you may have a path to homeownership at FHA. But if your household debts are heavy — especially if they exceed 50 percent of your income — get professional financial-counseling advice before signing up for an FHA loan. Your FICO score may meet FHA’s easing standards and your DTI may pass the test. But if you have to spend half or more of your income on your mortgage and other credit payments.

Buying doesn’t have to be a huge undertaking, but it’s one where details really matter. We realize the decision to Buy is a personal one that depends on your financial situation, future plans and lifestyle. When you’re working with real estate professional Carriene Porter of Precision Realty & Associates, you’re guaranteed to get the expertise and advice you need to sell or buy your home. If you prefer a more personal touch, CALL 801-809-9866 today. 

 #RealEstateForSale #Homeownership #UtahRealEstate #Creditscore

Source: The Washington Post (Aug. 29, 2018)