This Week’s Short Stories

Mortgage Rates Improve this Week
Mortgage rates dropped this week, preserving a range they’ve been in since May. Rates have remained in a range from 4.125% to 4.25%, and most of the day-to-day movement has been in closing cost adjustments.

Foreclosures up in May
Year-over-year, foreclosures have been falling in most areas. However, in May foreclosures were up compared to the April level. This is according to CoreLogic. Completed foreclosures numbered 47,000 in May, up by 2.8% over April, but down year-over-year by 9.4%.

Millennials to Make Housing Mark … maybe

Mortgage and Housing Outlook for 2014

It may seem a little late to be talking about the real estate industry outlook for this year, as we’re already more than half way through it. However, over at NuwireInvestor.com, there is an interesting article this week doing just that.
It begins by stating that things are certainly getting better, but also predicting that there will be no quick snap back to normal market conditions anytime soon. HSH.com, a mortgage and housing research company provides some data:
• Mid-year analysis shows 30-year fixed mortgage rates could move up to 5% to 5.25% before the year is over.
• That’s a significant factor, as the current rate is around 4.233%.
• With the Fed attempting to keep interest rates down, it is expected that entry level ARM rates will remain low.

When Cash Buyers Move Out of a Market

Real estate is local, and every market is unique. However, certain trends are national in nature, and the law of supply and demand doesn’t change from market to market. Playing out in the Las Vegas, NV market right now is a situation with cash buyers leaving the market. It could be a learning tool for investors in other markets to mitigate risk and even possibly wait for better deals to appear with lower demand.

This Week’s Short Stories

Pending Home Sales Up

Pending home sales rose sharply in May. Low mortgage rates and increasing inventories helped. All four regions of the country saw increases. The Pending Home Sales Index increased by 6.1% in May. This is the largest monthly gain since April, 2010.

Minimum Wage Increases Make the Day for Mobile Home Park Owners

A statistic overlooked by many investors is the relationship between mobile home park values and the minimum wage. With the minimum wage at $7.25, a monthly income of around $1,200 mandates rent of roughly 38%, or $456 per month. While apartment project and single family landlords can rarely get their rents down to this range, it’s common for mobile home parks to provide housing for around $500/month.

Some Say Flipping is Hurting the Housing Market

The people saying that certainly aren’t engaged in flipping. Watching the house flipping “reality” shows on TV, it’s no wonder that everybody and their brother wants to jump into flipping. After all, it’s easy to grab up a dilapidated bargain, slap on some paint and new countertops, and sell at a big profit … right? Maybe.
Redfin pulled some average flipping profit numbers that certainly seem to bear out that it’s a major profit generator for many. The top 27 markets averaged $90,200 in profit per flip in 2013. California dominated the top of the list for average per-flip profit with:
• San Francisco $194,600
• San Jose $152,000
• Oakland $134,500
• Los Angeles $126,100

Pent Up Demand Not for Buying, Definitely for Rentals

Take a look at any recent or even past marketing or market-related reporting coming from NAR, the National Association of Realtors, and you’ll find that it’s always a good time to buy a home. Right now with dismal sales, a lousy economy, and almost no first time home buyers anywhere to be found, just where is the “pent up buying demand” that the industry wants so much to promote? By promising that demand is about to spike, it makes some people feel safer in buying and expecting prices to appreciate.
Unfortunately, almost no data exists to support this theory. People aren’t buying or selling homes for a number of fundamental reasons:
• They’re insecure in their jobs.
• They’re experiencing wage increases below the inflation rate.

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