Mortgage Rates Rise For Third Straight Week

Mortgage rates in Metro Atlanta keep on rising.

According to Freddie Mac's weekly Primary Mortgage Market Survey, for the third straight week, the 30-year fixed rate mortgage rate rose, this time tacking on 3 basis points on a week-over-week basis to 3.62%, on average, nationwide. The 3.62% mortgage rate is available to mortgage applicants willing to pay 0.6 discount points plus a full set of closing costs.

Freddie Mac's published mortgage rates are compiled from a 125-bank survey.

Looking back, it appears that national 30-year fixed rate mortgage rates bottomed at 3.49% in late-July. In the weeks leading up to that bottom, mortgage rates had dropped in 11 of 12 weeks. Since then, however, mortgage rate have increased steadily, climbing to a 7-week high, depending on where you live.

Mortgage rates vary by region. As reported by Freddie Mac, mortgage applicants in the South Region are currently paying the highest rates. Applicants in the North Central are paying the lowest.

• Northeast Region : 3.62% with 0.6 discount points
• West Region : 3.59% with 0.6 discount points
• Southeast Region : 3.68% with 0.6 discount points
• North Central Region : 3.58% with 0.6 discount points
• Southwest Region : 3.66% with 0.6 discount points

Mortgage rates don't figure to drop in the coming weeks, either. The same forces that drove mortgage rates down between January-July of this year are the same ones that are driving rates up today -- expectations for new Federal Reserve-led stimulus.

Earlier this year, the economy was stalling; growing slowly, but not convincingly. This led to Wall Street speculation for the Federal Reserve to implement a bond-buying program that would lead mortgage rates down, among other outcomes. The Fed repeated comments that it would do what is necessary to keep the economy on track only served to fuel such speculation.

Last month, however, at the Federal Open Market Committee, Ben Bernanke & Co. did not add new stimulus, and seemed content to take a "wait-and-see" approach with the economy. Since then, Europe appears to have put itself on-track and the U.S. economy has shown signs of expansion.  

The August rise in rates is Wall Street reversing its bets; planning for no new stimulus at all.

Mortgage rates remain low, though. If you've yet to join this year's refinance boom, or if you're hunting for a home, consider locking something in. In a few weeks, mortgage rates may be higher still.

For more information about the Atlanta area real estate market, please email me at ed@edshort.com or call me at 404.918.2500.

~ Ed Short, Atlanta REALTOR®

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Homebuilder Confidence Rises To 5-Year High

Home builder confidence rises again.

For August 2012, the National Association of Homebuilders reports the monthly Housing Market Index at 37 -- an increase of more than 100% from one year ago and the highest HMI value since February 2007.

The Housing Market Index is an indicator of homebuilder confidence and when it reads 50 or better, the HMI suggests favorable conditions for home builders. Readings below 50 suggest unfavorable conditions for builders.

Despite the recent rise in home builder attitudes, however, the Housing Market Index remains mired below 50 where it's been since April 2006.

For new construction home buyers in Metro Atlanta, the HMI may offer insight into the market for new homes through the end of this year. This is because the NAHB Housing Market Index is a composite survey, meant to gauge builder sentiment in three specific areas -- current business, future business, and buyer activity.

When all three fronts are rising, it points to an improving market for sellers (i.e. home builders). Unfortunately, though, what's good for sellers can be damaging to buyers. Builders are less willing to make concessions on price or product when markets are getting stronger.

In August, home builders saw strength across all three categories :

• Current Single-Family Sales : 39 (+3 from July)
• Projected Single-Family Sales : 44 (+1 from July)
• Buyer Foot Traffic : 31 (+3 from July)

Especially noteworthy in the August HMI is that builders project more sales for the next six calendar months than they have projected at any time in the last 5 years. With mortgage rates at all-time lows and buyer foot traffic growing, it's no wonder confidence is high.

When demand for homes is strong amid stagnant or falling supplies, home prices rise and that's exactly what we're seeing in many U.S. markets. It's a good time to be a Georgia home buyer today, but market momentum appears to be shifting.

If you're in the market for a newly-built home, therefore, the best "deal" may be the one you get today. Next year, your costs may be higher. 

For more information about the Atlanta area real estate market, please email me at ed@edshort.com or call me at 404.918.2500.

~ Ed Short, Atlanta REALTOR®

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Home Affordability Sinks For The First Time In 12 Months

Rising home prices are taking a toll on today's home buyers. For the first time in 4 quarters -- and despite falling mortgage rates -- home affordability is sinking. 

Earlier this week, the National Association of Home Builders reported the Home Opportunity Index, a measure of home affordability, down to 73.8 for the second quarter of the year. This marks the metric's first "down" quarter since the second quarter of 2011, and is its lowest reading since December 2010.

A home is considered "affordable" when its payments meet standard mortgage underwriting criteria for families earning the local median income. This definition is used for homes across all U.S. markets -- including for homes in Metro Atlanta.

73.8% of homes sold last quarter were affordable to households earning the national median income of $65,000. This is the 13th straight quarter dating back to 2009 that the index surpassed 70. Prior to 2009, the Home Opportunity Index had not crossed 70 even one time.

Like all real estate data, home affordability varied by locale.

In the Midwest, for example, affordability was highest. 7 of the top 10 most affordable markets nationwide were spread throughout the nation's heartland. An Alaskan city took the top spot.

The top 5 most affordable cities for home buyers in Q2 2012 were:

1. Fairbanks, AK (98.7%)
2. Mansfield, OH (98.1%)
3. Springfield, OH (95.9%)
4. Carson City, NV (95.4%)
5. Kokomo, IN (95.4%)

At #23, Ocala, Florida (91.7%) was the top-ranked South Region city last quarter.

By contrast, the Northeast Region and Southern California remained among the least affordable housing markets nationwide. Led by the New York-White Plains, NY-Wayne, NJ area, 9 of the 10 least affordable areas were in the Mid-Atlantic and California, and for the 17th consecutive quarter the New York metro area was ranked "Least Affordable".

Just 29.4 percent of homes were affordable to households earning the area's median income there, down from 31.5 percent three months ago.

The rankings for all 225 metro areas are available for download on the NAHB website.

For more information about the Atlanta area real estate market, please email me at ed@edshort.com or call me at 404.918.2500.

~ Ed Short, Atlanta REALTOR®

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Should You Lease Or Buy Your Next Car? It May Affect Your Mortgage.

Should you lease a new car, or should you buy one? Like most financial questions, the answer depends on your situation. For some people, leasing a car presents distinct economic advantages. For others, buying a car is the way to go.

There's plenty of online material to help you choose your optimal path, but this 3-minute piece from NBC's The Today Show serves as an excellent summary. In it, you'll learn about the basics of leasing a car, and for whom leasing can be a great fit. You'll also hear reasons to avoid a lease completely.

The NBC interview makes all of the following points :

• Leasing allows you to drive a car that may be "too expensive" to purchase
• Leasing puts you in a new car, with the latest safety features and gadgets, every few years
• Buying a car means that you have no mileage limits, and can sell at any time

For many people, it concludes, buying a car is preferable to leasing one, with a notable exception being those people who can claim their car or truck as a tax deduction. Be sure to check with your tax advisor if you plan to take that route.

However, for another group -- homeowners and active home buyers -- leasing a car can invite mortgage approval trouble. This is because a car lease payment is assumed by a mortgage underwriter to be a perpetual debt; one that never reduces or gets extinguished. When a lease is complete, it must be replaced with a new lease, and so on.

Therefore, no matter how many payments remain in a lease, mortgage applicants must use the full car lease payment for purposes of a mortgage approval.

By contrast, for people whom are owners of their automobiles, car payments must only be added to debt ratios if more than 10 car payments remain until the car's loan is paid-in-full. For homeowners and buyers in Metro Atlanta , this can improve debt-to-income ratios and support a higher purchase price on a home.

There is no firm rule for whether it better to lease a car or to own one. The arguments for both sides are compelling and reasonable. Start with the video, then do your own research. 

For more information about the Atlanta area real estate market, please email me at ed@edshort.com or call me at 404.918.2500.

~ Ed Short, Atlanta REALTOR®

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How Long Will Foods Last In A Refrigerator?

Do you keep "past due" foods in your refrigerator? You wouldn't be alone. A study from the Home Food Safety website shows that more than 40 percent of people either have never cleaned their refrigerators, or can't remember the last they did.

Past due foods can lose their taste, give off bad odors, and/or make you ill -- just a few of the reasons to remain vigilant about your refrigerator's perishable foods.

Still nursing that ketchup from last Labor Day's grill out? Put it in the trash. Storing canned vegetables that you bought last year? Get rid of them today. 

Watching that freezer burn develop on some of your cold-storage foods? Pitch them in the garbage. 

There's very little good that comes from eating food that's been damaged, spoiled, or left to rot slowly. That's one of the reasons why FoodSafety.gov has created its "Storage Times For Refrigerator And Freezer" chart. Listed by food category, it tells you how long a particular food type can remain "safe" in your refrigerator, and in your freezer.

A sampling of the foods, plus their recommended maximum storage times, includes :

• Deli-sliced luncheon meat : 5 days in the refrigerator; 2 months in the freezer
• Hamburger meat : 5 days in the refrigerator; 2 months in the freezer
• Leftover pizza : 4 days in the refrigerator; 2 months in the freezer

In all, the list contains recommendations for nearly two dozen common foods. 

In addition, the FoodSafety.gov website maintains a separate safety information section for egg and egg-based products.  Egg storage safety is important because more than 400 people contract salmonella each month nationwide.

From scrambled eggs and pies, to quiches and egg-yolk substitutes, you'll know how long to keep your food, and how long until you should throw it out.

For more information about the Atlanta area real estate market, please email me at ed@edshort.com or call me at 404.918.2500.

~ Ed Short, Atlanta REALTOR®

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5 States Home To 50% Of Foreclosure Activity Nationwide

Foreclosure pipelines are re-filling nationwide.

According to data from RealtyTrac, a national foreclosure-tracking firm, the number of foreclosure filings dipped below 192,000 in July 2012, a 3 percent decrease from the month prior.

RealtyTrac defines a "foreclosure filing" as any foreclosure-related action, including a Notice of Default, a Scheduled Auction, or a Bank Repossession.

July marks the 22nd straight month during which foreclosure filings fell on a year-over-year basis. At some point soon, however, that streak may end. This is because, for the third straight month, on an annual basis, foreclosures starts are on the rise.

More than 98,000 homes started the foreclosure process in July, a 6 percent increase from July of last year. Connecticut, New Jersey and Pennsylvania experienced the biggest increases, rising 201%, 164% and 139%, respectively.

Each is a judicial foreclosure state, which means that foreclosures must go through the state court system prior to auction.

Nationwide, just a few states accounted for the majority of July's total foreclosure activity. 5 states were home to more than half of all tracked activity, according to RealtyTrac.

• California : 21.9 percent
• Florida : 13.3 percent
• Illinois : 7.2 percent
• Georgia : 5.7 percent
• Texas : 5.2 percent

Collectively, these 5 states represent just 33 percent of the nation's population.

In contrast to the five states above, the bottom 14 states accounted for just 1 percent of the nation's foreclosure activity, led by North Dakota. In North Dakota, just 3 foreclosure filings were made in July. Other "fewest foreclosure" states in July included District of Columbia (7 filings), Vermont (31 filings), and South Dakota (63 filings).   

For home buyers in Metro Atlanta, with more foreclosed properties expected to go for sale this year and next, there will be some excellent "deals" and discounts -- foreclosed homes typically sell at discounts of 20% or more as compared to comparable, non-distressed homes. However, foreclosed homes are often sold as-is, which means they may have defects.

Before placing a bid on a foreclosed home, therefore, make sure to have an experienced real estate agent on your side. Buying a foreclosed home may save you money at your closing, but may cost you money longer-term.

For more information about the Atlanta area real estate market, please email me at ed@edshort.com or call me at 404.918.2500.

~ Ed Short, Atlanta REALTOR®

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Improving Market Index Spans 32 States, District Of Columbia

80 U.S. metropolitan markets are showing "measurable and sustained growth" this month, according to the National Association of Homebuilders' Improving Market Index.

It's good news for the economy and good news for housing. 

The NAHB's Improving Market Index is meant to identify U.S. markets in expansion. It's a composite of the three distinct data sets which, as a group, present a more holistic view of a given city's growth :

1. From the Bureau of Labor Statistics, the IMI tracks employment figures
2. From Freddie Mac, the IMI tracks home price data
3. From the Census Bureau, the IMI tracks single-family building permits

The home builder trade group compiles this data and, in order for a given metropolitan area to earn the label "improving", the area must meet two specific growth conditions.

First, in a given city, each of the above data sets must show growth or expansion in the current calendar month. If one of the three do not show growth, the city cannot qualify.

Second, in a given city, at least six months must have passed since the most recent trough of all of the above metrics.  It's this second clause that can make the Improving Market Index meaningful.

By focusing on long-term growth trends within a city, the IMI ignores "blips" and seasonal irregularities. 

The August IMI shows 80 improving markets nationwide, a 4-city decrease from July 2012. 5 new cities were added to the index including Miami, Florida; Terre Haute, Indiana; and Lubbock, Texas. Nine cities fell off the list.

Overall, 32 states are represented in the IMI, and the District of Columbia, too.

For today's Metro Atlanta home buyers, the IMI doesn't provide much actionable information. It doesn't show home prices, for example, nor the current demand for homes. What it shows is the strength of local economies, though, and in many cases, as the economy heats up, so do home prices.

The complete Improving Markets Index is available for download at the NAHB website

For more information about the Atlanta area real estate market, please email me at ed@edshort.com or call me at 404.918.2500.

~ Ed Short, Atlanta REALTOR®

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