Gary Pierpont Blog

Home sales in the U.S. continue to increase as foreclosure rates fall according to the Obama Administration’s February scorecard. Although the housing market is making impressive strides, many officials remain cautious, suggesting that the market is still in a state of recovery. The Federal Reserve Board stated that homeowner’s equity increased more than $400 billion during the last few months of 2013. The HUD Deputy Assistant Secretary for Economic Affairs, Kurt Usowski said, “February’s Housing Scorecard continues to show that the Obama Administration’s efforts to stabilize the housing market and provide relief to struggling homeowners are having a positive effect.” More here

Recent reports have shown that the economy is gaining more strength and continuing to show improvement. The Federal Reserve suggested that lower borrowing costs may be the reason behind an increasing number of consumers borrowing money for home and vehicle purchases. According to recent data, home sales have significantly improved, and auto sales have almost reached pre-crisis levels. More here

A new article in the Financial Times suggests that an increasing number of financial advisors specializing in retirement are starting to think of reverse mortgages as “lifesavers” for those who qualify living in negative financial circumstances. The program has experienced some rule changes over the last few months, and in turn has helped aid in reverse mortgage consumer protection. Experts have stated that the tax-free proceeds gained from a reverse mortgage can help consumers postpone Social Security usage and can decrease the amount withdrawn from their 401(k) and IRA accounts,  Marguerita Cheng, the CEO of Blue Ocean Global Wealth said, “the bottom line is that reverse mortgages are no longer only for retirees in dire straits. Advisors should be looking at every aspect of income, including home equity.” More here

According to a new survey released by the Mortgage Bankers Association, mortgage applications increased this week by 9.4%. The refinance index jumped 10% from the week prior, though rates are still 3% lower than two weeks ago. Refinances fell to 57.7% of applications; the lowest level observed since September 2013. Additionally, 30-year fixed-rate mortgage interest rate fell 0.04%, averaging 4.13% nationally, and the 15-year fixed rate mortgage interest rate also fell 0.04%, averaging 3.52% nationally. More here

Trulia has released new data stating that owning a home may be a cheaper option in many metropolitan areas than renting. According to the report, homeowners who stay in their homes for seven years will save approximately 38% when compared to those who rent. Jed Kolko, Trulia’s chief economist said, “even in these metros buying remains cheaper, thanks to mortgage rates that are still very low by historical standards.” A few of the metros mentioned are Chicago, Los Angeles, Dallas, Philadelphia, Washington, and Houston. More here

According to the most recent report from Equifax National Consumer Credit Trends, the amount of outstanding balances on bank and retail-issued cards, and home finances jumped for the third month in a row. Home finances increased by $8.59 trillion; bank issued cards grew by $555.4%, and retail issued cards experienced a $62.2 billion jump. Equifax chief economist, Amy Crews Cutts said, “home purchase transactions, in which first-time homebuyers take on entirely new mortgage debt and move-up buyers increase their existing mortgage debt, have finally overtaken foreclosures and accelerating pay-downs, resulting in increases home finance balances.” More here

According to Freddie Mac’s multifamily report, rent and vacancy rates will experience measurable growth throughout 2014 and will reach long-run historical levels. The report forecasts that cap rates will stay below 7% over the coming year, and interest rates will increase. As a result, this will promote higher property values. The executive vice president of Freddie Mac Multifamily, David Brickman said, “as the broader economy continues to grow, we expect the overall multifamily sector to remain strong in 2014. Revenue growth in the industry will continue to perform near or above historical averages, but at lower rates than the previous two years.” More here

According to a recent study, housing market recovery will experience uneven growth over the next five years. Data suggests that, by the year 2018, median home prices for single-family homes will average close to the peak that was achieved in 2006. Experts expect Tampa, Memphis, Jacksonville, St. Louis and Milwaukee to experience the largest gains in median priced single-family homes. Co-author of the report and chief research officer at the Demand Institute Louise Keely said, “the strength of the local housing market is among the most telling metrics that helps us assess community health and well-being.” More here

Recent data shows that sales for Lowe’s, a popular home improvement store, have increased over the last year. The store reported a net income of $306 million, in the fourth quarter of 2013, increasing 6.3% from the prior year. Store earnings are affected by home prices, employment, and home ownership. Although sales have grown over the last year, the store has expressed reserve over the coming months saying, “our Consumer Sentiment Survey suggests a continued willingness for consumers to invest in their homes, however, there has been a recent slowdown in both housing activity and jobs growth which makes us cautious.” Additionally, sales are expected to increase around 5%. More here

Home prices are increasing at a slower pace which many experts say is good for prospective buyers, as it keeps an increasing number of properties affordable longer. According to the S&P/Case-Shiller index, property values jumped 13.4 from the end of 2012 in 20 U.S. cities. The housing market is still well on its way to a full recovery according to economists. Michael Feroli, chief U.S. economist at JPMorgan Chase & Co said, “the housing recovery continues, but perhaps not as vigorously as it did in the first half of last year. Even so, appreciation trends still look pretty good even though they may not be as strong as they were.” More here