Shiny Trinket

Housing market showing signs of stability at last

It’s finally getting normal around here. According to a recent analysis by Realtor.com's Andrea Riquier, there's fresh evidence that the housing market is gaining some stability after some crazy years of multiple offers that resulted in inflated pricing in many markets.

You can’t argue with the Census Bureau, which says the national homeownership rate was 64.4% in the third quarter, a half-percentage point higher than a year ago. That may not sound like much, but if you study the numbers, it’s a big deal.

“After touching an all-time high of 69.1% in 2004 as the housing bubble inflated, the homeownership rate bottomed out at 62.9% in 2016 as waves of Americans lost their homes or sold under duress,” says Riquier. “At the same time, many Americans who would ordinarily become buyers were locked out of the market by stringent lending rules, a lack of affordable inventory and a challenging economic backdrop.”

Over the past 12 months, 1.77 million more Americans became owners, while the number of renters declined by about 100,000, adds Riquier in a MarketWatch report. "Even better, the biggest jumps in ownership were among younger people. For those under 35, 36.5% were owners in the second quarter, compared to 35.3% a year ago. Americans age 35 to 44 saw a correspondingly hefty jump, to 60% from 58.8% in 2017."

This all points to a potential moderation in home prices going into 2019, which some analysts believe came from would-be buyers pushing back against hefty price gains, helped many of them finally become owners.

While there's a lot of speculation about what made this happen, the meager recovery to this point puts the homeownership rate only back to 1995 levels, well before the run-up to the 2008 bubble, suggesting it may be possible for many more Americans to become owners providing market conditions ease further. The vacancy rate for owners was just 1.5% for the second month in a row, tighter than the 1.6% it averaged throughout 2017.

How Rates Move:

Conventional and Government (FHA and VA) lenders set their rates based on the pricing of Mortgage-Backed Securities (MBS) which are traded in real time, all day in the bond market.  This means rates or loan fees (mortgage pricing) moves throughout the day, being affected by a variety of economic or political events.  When MBS pricing goes up, mortgage rates or pricing generally goes down.  When they fall, mortgage pricing goes up.  Tracking these securities real-time is critical.  For more information about the rate market, contact me directly.  I’m among few mortgage professionals who have access to live trading screens during market hours.

Rates Currently Trending: Neutral

Mortgage rates are trending sideways so far today.  Last week the MBS market improved by +65bps.  This was enough to move rates lower last week. We saw high rate volatility at the end of the week.

This Week's Rate Forecast: Neutral

Three Things: These are the three areas that have the greatest ability to impact mortgage rates this week. 1) Brexit, 2) Trade War and 3) Across the Pond

1) Brexit: This story will continue to dominate all financial markets. PM May, could be voted out, or the cabinet could move to hold yet another referendum vote among the citizens of Great Britain. Or May's proposal could pass.....the uncertainty is very unsettling for the markets.

2) Trade Wars: Hopes that some incremental agreement between the U.S. and China have fallen by the wayside and markets are now expecting a very long and expensive trade war. Expect a lot of rhetoric between now and the G20 meeting that runs from November 30 to December 1.

3) Across the Pond: We'll get key inflationary readings (CPI) and manufacturing (Markit Flash PMI) from several of the largest economies outside of the U.S. this week.

Talking Fed this Week:

• 11/19 John Williams
• 11/23 Fed's Balance Sheet

This Week's Potential Volatility: Average

We have a shortened holiday week. The bond market will be closed Thursday and reopen on Friday for an abbreviated session. Look for volatility to be relatively low this week. However, with the thin trading, anything unexpected from the markets or geopolitically and we could see exaggerated movements.

Bottom Line:

If you are looking for the risks and benefits of locking your interest rate in today or floating your loan rate, contact your mortgage professional to discuss it with them.

Dona Knapp has over 20 years of experience, which is evidenced by her extensive knowledge of the lending industry, making her a great source of information for their clients. Her commitment to excellence has earned her a reputation of customer satisfaction and building relationships that last far beyond the original transaction. Her team was strategically designed to provide superior service, uninterrupted accessibility and extraordinary products to meet all your lending needs. Don't settle for less, when you can work with the best!

All information furnished has been forwarded to you and is provided by thetbwsgroup only for informational purposes. Forecasting shall be considered as events which may be expected but not guaranteed. Neither the forwarding party and/or company nor thetbwsgroup assume any responsibility to any person who relies on information or forecasting contained in this report and disclaims all liability in respect to decisions or actions, or lack thereof based on any or all of the contents of this report.