Gary Pierpont Blog

From the 2009 bottom of the market, single-family housing starts are up slightly more than 100%. Multi-unit buildings, on the other hand, are up a whopping 466%. Although those numbers feel out of whack at first glance, it likely makes sense in this post recovery period. In 2005, home ownership had grown to over 69%, which is arguably too high. Since the crash, there’s a growing need for rental properties. That, combined with the movement into the cities from suburbia, starts to make these numbers make sense.

The folks over at credit.com have written quite an extensive article on the impact of getting a mortgage pre-approval on your credit rating. The short answer is, they have an impact, but it’s quite small. For more details, the article is well worth the read, as they go into the difference between hard inquiries and soft inquiries, the impact and what constitutes each, and they go on to provide links to different credit scoring models that lenders use, as well as the standard “how to check my credit”.

If you’ve done any research into home ownership, then you’ve undoubtedly run across the various ways that making your payment differently can impact your lifetime cost (in terms of interest), and how long it takes to pay down your mortgage. Typical schemes include making one extra payment per year, or dividing your payment in half and paying the same amount each month, but in two installments. Fox News explores the impact of taking it one step farther, and making weekly payments.

Rumors have been flying fast-and-furious the last few months about when the Fed is finally going to raise interest rates. With the recent turmoil in global stock markets and China in particular, the future of Fed decisions is even more uncertain. But according to a Reuters poll, it probably doesn’t matter. The housing market is doing so well, that a Fed rate hike is unlikely to dampen enthusiasm. The consensus is that home prices will rise 5% this year, and that should be sufficient to keep the market buoyant. 

This blog just reported yesterday on the banner year it’s been for foreign investors in U.S. real estate, and for China in particular. Coincidentally, Sam Van Horebeek, a director at a U.S. real estate advisory firm based in China wrote about the effect of the Chinese stock market meltdown on interest in the U.S. real estate sector. Fully 50% of those they interviewed are considering acquiring overseas real estate — and it’s not just the mega-rich, it’s the “mass-affluent”, a group almost as large as the entire population of the U.S.

Just done reviewing the 2015 National Association of Realtors’ Profile of Home Buying Activity of International Clients. There are definitely a few interesting statistics in there. For example, while the number of units sold international slightly declined, the average purchase price was up — and at $499,600, if you’re a real estate agent who wants to up his average price, you may want to target foreign buyers. Also, for the first time, Chinese buyers surpassed Canadians, purchasing $28.6 billion worth of property.

Property taxes aren’t the purview of the Feds; however, the FHA opposed plans to make solar power tax deductible because tax assessments take precedence over mortgages in the event of a default, there was general opposition to so called PACE (Property Assessed Clean Energy) programs from Fannie and Freddie in light of the 2007 recession. Now, that’s changing. The FHA just released guidelines that will enable the program pioneered in Berkley, CA, to be made available nationwide.

Bill Greiner makes a fairly convincing argument in Forbes that the housing market will be driving real GDP growth upwards of 3% over the next 18 months. He distinguishes between existing home sales and new home sales, and gives an explanation of key factors: employment, confidence, affordability, alternatives, and tax impact. Additionally, he looks at the comparative value of owning vs. renting, and comes up with some compelling and surprising numbers (at least at the national-average level).

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The mortgage industry has been moving towards e-closings for quite a while now (as this blog has covered before), and there are great hopes that this will streamline and simplify the process. However, before we get all the way there, things may take a step backwards. New federal disclosure rules, though designed to simplify financial reporting, are likely to have a retarding effect on the speed of closings as we exit summer and head into the fall. The new changes go into effect October 3rd.

As this blog reported a few days ago, mortgage application rates were relatively flat in total, but underlying that data were some big swings that didn’t show up in the average. These changes are particularly surprising given the rate of home building starts and U.S. consumer confidence. The current thinking from the Mortgage Bankers Association ties those underlying moves along with the drop in long-term interest rates (the 30 year fixed rate was down to 4.11% last week) to the current angst in China.