A couple of days ago, we shared the insights of one home buyer who extolled the virtues of shopping for a home in the depths of winter. But it isn’t all just about the buyer. U.S. News & World Report wrote about the advantages of selling in the winter from an investor’s perspective. Some of their reasoning is market specific (e.g., if you’re selling in Florida, winter is a great time to capture snowbirds), but they also make some generic points that hold no matter where you’re home is.
There have been a number of articles over the last weeks indicating that the housing market is strong enough to continue growth, even in the face of a Fed rate hike. On top of that, Fitch released their ratings report today, backing up that conclusion. But in the face of that, 35% of major U.S. housing markets have hit all time highs — not highs since the crash, ALL TIME highs. In some markets, like Denver, that may not be surprising, but what if I told you that Detroit, MI, was at an all-time high? And to compound matters, all-cash sales have increased for the 3rd month in a row — which means foreign investors propping up the market. All-in-all, we say it’s anybody’s guess which way home prices go in the new year.
Shopping for a house in the middle of winter isn’t for everyone — and neither is selling a house in the middle of winter. And that’s exactly why, if done correctly, this can be the perfect time to buy. Holden Lewis describes his lessons-learned from starting shopping for a home in December, in Toledo, Ohio. Of course, the housing market is particularly strong right now, but even in times of strength there’s seasonality, and for buyers, now might well be the best time of year to look.
This is always a tricky topic, and we’ve even seen a series of articles recently suggesting that one should never pay off their mortgage — that having a large, long mortgage is nearly always the most sound financial decision. That seems a bit of a stretch, but Kristin McFarland of The Smarter Investor asks a more reasonable question: should you pay off your mortgage early? Her blog post hits on 6 key areas you should consider before making this decision — and correctly points out that the “right” answer is different for different people.
We’ve reported quite a few times this year on the strength of new housing starts, and with today’s job report, that doesn’t look set to change anytime soon. So, in honor of all the new homes being built, we thought it was worth taking a look at the history of the American home. What we found was this great article from FastCompany on their Design site. Better still, the article links to a gorgeous poster, printed on 100 lb. archival stock, which you can purchase for $29 from popchartlab.com. Even if it’s not for you, we bet you know someone for whom it would make the perfect gift!
As much as I’ve been blogging about the successful recovery in the housing market, and as much as delinquency rates have gone down, CNN Money correctly points out that there’s one area of the housing market that, while better, is still weighing down the broader market: underwater homes Down to 13.4%, the number of homes with negative equity is shrinking, but that’s still almost one in every 7 homes that can’t yet be refinanced or get a HELOC. Once those get above water, well, to mix metaphors, a rising ocean lifts all ships.
This is such big news today that we can’t even find the original source — it’s literally all over the Internet — so we’ll just take this one from Detroit. The original cord cutters have reached a threshold. People canceling cable TV for Netflix may still have a way to go, but people ditching land-lines for cell phones has now reached 50:50. That’s right, only half of American phones still have a land line, at all (only 8% go the other way, and have a land line, but no mobile). Which side of the coin is your house on?
For some context, in 2009 jumbo loans accounted for 5.5% of the market. Contrast that with this year, through September, where they’re accounting for almost 19% of the market — the highest level since 2006 (though still not quite to the peak of 2000). Why the difference? The answer is simple. A conforming loan is based on government set limits. The price of houses has been going up, and the government limits haven’t. The median home price in most of the U.S. is well below the normal limit, but only 39 counties will see increases in 2016, which will put pressure on mortgages over much of the country.
There was a while there where covering mortgage rates got (depending on your perspective) highly entertaining or highly nerve-wracking, as the news flip-flopped every day. Well, mortgage rates and the housing market all seem reasonably stable at the moment, but one of the big factors driving home prices has been foreign investment. Now it’s time for that to flip-flop. Depending on who you believe, either we’re awash in Chinese money, or the Chinese are fleeing the market.
OK. The article is a paid op-ed by PIMCO, so they have a vested interest in the position. But that doesn’t mean they’re wrong. The four points Mark makes — strong job growth and consumer confidence; low inventories and rising pent-up demand; a willingness to lend and expanding demand for credit; and relative affordability — are all true. For those reasons, the housing market looks to be a good, stable investment option for the near-term future, regardless of what the Fed does.
