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While mortgage rates have been rising the last few months, they are still historically low compared to the trend over the last four decades, Freddie Mac says.

But rates as low as they were in November 2012 — when the 30-year fixed-rate mortgage reached an all-time low of 3.31 percent — aren’t likely to return any time soon, the mortgage giant says. Still, Freddie assures borrowers that the all-time record high of 18.63 percent reached in October 1981 isn’t on the horizon either. (At 18.63 percent, monthly mortgage payments on a $200,000 loan would be $3,117, compared to $992 a month at today’s 4.32 percent average.)

With the present mortgage rates, 123 of the 157 metros that Freddie Mac tracks remain very affordable to households earning the median income. In order for affordability to be hampered in the majority of markets, interest rates would have to reach 7 percent, according to Freddie Mac.

“Stubbornly high unemployment over the last several years coupled with stagnant income growth exacerbates declining affordability in a rising interest rate environment,” according to Freddie's blog post. “More jobs and income growth would help blunt the effects of higher interest rates and make buying a home more accessible. While jobs and income have shown some improvement in recent months, they continue to be challenged.”

Mortgage Rates Through the Years

Here’s an overview of mortgage rates in the past four decades, as well as the approximate payment on a $200,000 mortgage and how it changes with the rise and fall of rates, according to Freddie Mac.

  • 1970s
    Average 30-year fixed-rate mortgage: 8.86%
    Approximate payment on a $200,000 mortgage: $1,589
  • 1980s
    Average 30-year fixed-rate mortgage: 12.70%
    Approximate payment on a $200,000 mortgage: $2,166
  • 1990s
    Average 30-year fixed-rate mortgage: 8.12%
    Approximate payment on a $200,000 mortgage: $1,484
  • 2000s
    Average 30-year fixed-rate mortgage: 6.29%
    Approximate payment on a $200,000 mortgage: $1,237
  • 2014
    Average 30-year fixed-rate mortgage: 4.36%
    Approximate payment on a $200,000 mortgage: $997

source:  Freddie Mac


Purchasers of vacation or second homes are continuing to buy properties much closer to their primary residence.

In the past, second-home buyers tended to buy properties out-of-state or were lured to vacation homes near far-flung resorts and tourist destinations. But second-home purchases these days seem to be more restrained, as more purchasers opt for vacation spots that are within a relatively short drive of where they live. Moreover, these properties aren't as glitzy as in recent years, The Wall Street Journal reports.

The median distance between a buyers’ vacation home and primary residence took its first decline on record three years ago, averaging a 305-mile distance according to data from the National Association of REALTORS®.

"People want to stay within driving distance because they're more able to maintain the homes, they have better networks in place, and friends and family nearby to use and sustain the homes," Jon Gray, vice president of, told The Journal.

A HomeAway survey found that vacation home buyer prefer to buy a home nowadays that can be reached in four hours or less from their primary home.

source:  Wall Street Journal


U.S. housing affordability is slowly falling due to higher home prices and qualifying income levels, despite borrowing costs from mortgage rates remaining at their lowest readings of the year, according to the National Association of REALTORS® latest reading on its Housing Affordability Index.

The median price for a single-family home in June rose 4.5 percent year-over-year to $224,300. But price gains are continuing to slow, NAR researchers note.

Affordability inched down slightly in all regions month-over-month in June as well as year-over-year, according to NAR’s report. The Midwest saw the largest month-over-month drop in affordability, while the West posted the largest year-over-year drop, with affordability falling 10.5 percent in the past year.

Meanwhile, the National Association of Home Builders, which maintains a separate housing affordability index, released its latest reading this week showing that affordability dipped in the second quarter as several markets saw increases in home prices. The NAHB/Wells Fargo Housing Opportunity Index showed that 62.9 percent of new and existing homes sold between the beginning of April and the end of June were affordable to families earning the median income of $63,900 – down from 65.5 percent in the first quarter.

"The second quarter HOI reflects the slow but steady march toward the historic levels of price appreciation and interest rates that result in affordability levels we experienced before the mid-2000s boom," says NAHB Chief Economist David Crowe. "While we are seeing a slight decrease in affordability, it is still fairly high by historical standards."

Most Affordable Markets

The NAHB index shows that Youngstown-Warren-Boardman, Ohio-Pa., continues to be the most affordable major housing market in the nation, where 90.4 percent of all new and existing homes sold in the second quarter were affordable to families earning the area’s median income of $52,700.

Other affordable markets also topping the index in the second quarter include:

  • Indianapolis-Carmel, Ind.
  • Syracuse, N.Y.
  • Harrisburg-Carlisle, Pa.
  • Scranton-Wilkes-Barre, Pa.

Least Affordable Markets

For the seventh consecutive quarter San Francisco-San Mateo-Redwood City, Calif., remains the nation’s priciest housing market, according to the NAHB index. About 11 percent of homes sold in the second quarter there were affordable to families earning the area’s median income of $100,400.

Other major metros that were found to be among the least affordable in the second quarter are:

  • Santa Ana-Anaheim-Irvine, Calif.
  • Los Angeles-Long Beach-Glendale, Calif.
  • San Jose-Sunnyvale-Santa Clara, Calif.
  • New York-White Plains-Wayne, N.Y.-N.J.

source:  National Association of REALTORS®’ Economists’ Outlook Blog and National Association of Home Builders

Housing affordability differs among races and ethnic groups, finds the National Association of Home Builders, which analyzed home affordability by race. 

Affordability differences are “dramatic and persistent across racial and ethnic lines,” says NAHB chief economist David Crowe about the findings.

Housing Affordability by Race

The NAHB found the following differences in housing affordability when broken down by race:

  • Whites:
     80.3 percent of homes sold were affordable to white families earning the group’s median income of $69,000.
  • Asians: 76.4 percent of homes sold were affordable to Asian families earning the median income of $80,500.
  • American Indians/Alaska Natives: 58.7 percent of homes sold were affordable to American Indians/Alaska Natives earning the median income of $43,200.
  • Blacks: 53 percent of homes sold were affordable to blacks earning the median income of $42,300.
  • Hispanics: 51 percent of homes sold were affordable to Hispanics earning the median income of $44,100.

By breaking down the data by race and ethnicity, “we have an even more accurate picture of  housing affordability," says NAHB chairman Bob Nielsen. "Builders have generally known that their efforts to build affordable housing were especially important to minorities in their communities, and this new report helps confirm that."

source:  National Association of Home Builders

Do you want to increase buyer traffic at an open house?

Instead of just a flyer or e-mail blast announcing the event, try to give buyers more reason to come out and tour the home. An article at RISMedia offers some of the following ideas for you and your realtor: 

  1. Host a speaker: A guest speaker, such as a general contractor or home stager, may draw more of a crowd. Your potential buyers may also be looking to sell their own homes, so a stager can offer tips to spruce up a home for sale.
  2. Offer a gift: Hold a raffle, such as by raffling off a gift certificate. Plus, with a raffle, buyers will have to share their contact information with you, which you can then use to follow up. If there’s ever a price change on the house, be sure to notify them.
  3. Involve the community: Invite the neighbors to come to the open house and share their thoughts about the school system or current events in the community, the RISMedia article suggests. You’ll not only be raising awareness about your listing but also helping “to unite the community on important issues,” the article notes. Just be sure to avoid political issues, which can polarize a crowd.

source:  RISMedia

Insurer Liberty Mutual offers a “green” general liability product for apartments and condominiums as well as offices, retail, and light-industrial buildings. 

The company offers an indoor environment endorsement that covers bodily injury claims resulting from specialized air- and water-quality equipment and products; and an adverse publicity exposure endorsement that covers crisis planning, management, and consulting when a green building incurs bad publicity due to a construction defect.

“Green building owners are a good risk because they are more likely to maintain their property and to have in place a strong risk management plan to protect their facility,” Joseph Peloso, vice president of liability programs for Liberty International Underwriters, a division of Liberty Mutual, said in a statement.

source: Liberty Mutual Group

Consumers didn't shop much this summer, as weak retail sales revealed. But business inventory levels remained steady. Meanwhile, industrial production has strengthened thanks to improvements in manufacturing. Automakers were key to the pickup.

For the week ended August 15, 2014, the S&P 500 Index was up 1.2% to 1,955 (for a year-to-date total return—including price change plus dividends—of about 7.1%). The yield of the 10-year U.S. Treasury note fell 10 basis points for the week to 2.34% (for a year-to-date decrease of 70 basis points).

Retail sales flatten

Retail sales for July were unchanged from a month earlier. Analysts had expected a 0.3% gain. There was a slight increase in sales among drug, apparel, and food and beverage stores. However, those gains were largely overshadowed by declines in department stores, other general merchandisers, and auto dealers. Motor vehicle purchases slipped in July, but are up 6.0% year over year, as dealers have benefited from easier access to credit and growing demand. As a whole, retail sales sagged after a brisk spring, when consumers rushed to the stores to fulfill pent-up demand following an unusually harsh winter. Sales were up 3.7% from a year ago, the slowest increase since February.

Manufacturing better than expected

Industrial production, which captures the output of factories, mines, and utilities, advanced 0.4% in July, better than expected. Manufacturing increased by 1.0%, the most since February. Motor vehicle and parts makers accounted for much of the improvement with a 10.1% surge in production. A shorter retooling period this summer helped automakers revamp production sooner. Excluding autos, production rose 0.4%. Mining output ticked up 0.3%. Utilities posted the biggest decline (–3.4%) as a mild summer has dampened demand for air conditioning. Capacity utilization, which is measured across industries, increased to 79.2% in July, a rate 1.7 percentage points above its level of a year earlier and 0.9 percentage point below its long-run (1972–2013) average.

The economic week ahead

Economic reports scheduled for next week include consumer price index and new residential construction on Tuesday, the Federal Open Market Committee's minutes on Wednesday, and existing-home sales and the Conference Board's leading indicators on Thursday.

source:  Vanguard Group


A home in Hong Kong is being listed for the equivalent of $105.7 million in U.S. currency, but it’s the price per square foot that has the world talking.

The home would cost $22,677 per square foot if it sells at its current price, making it the world’s most expensive home ever sold on a per-square-foot basis, The Wall Street Journal reports. It would also be the priciest home ever sold in Hong Kong.

The 4,661-square-foot home features four bedrooms, a private pool, a garden, rooftop terrace, and a carport that can accommodate two cars. The home is located in the new Twelve Peaks development within the city’s exclusive Victoria Peak neighborhood.

The home's developer, Sun Hung Kai Properties, has offered any fast-acting buyer a 3 percent discount if a deal is made within five months. Discounts are becoming more common in Hong Kong as developers try to revive recent sluggish demand for new homes lately, The Journal reports.

How does the house compare to U.S. real estate prices? Forbes recently spotlighted the most expensive homes listed for-sale in the U.S., with the Owlwood Estate in Holmby Hills, Calif., currently leading at an asking price of $150 million for a 13,000-square-foot mansion on 10 acres.

source:  Wall Street Journal and


Sales of newly built single-family homes have sputtered at times during the spring-summer selling season. Reasons vary.

"We keep hearing from our members that tight credit conditions are preventing many first-time buyers and younger families from being able to buy a home," says Kevin Kelly, chairman of the National Association of Home Builders. "Congress must outline a clear policy on housing finance so that qualified buyers can get home loans. Otherwise, this continued uncertainty could threaten the housing recovery and overall economy."

Overly stringent underwriting standards for mortgages are taking most of the blame. These tight standards have had a ”detrimental effect on modest-priced markets and have hit first-time home buyers particularly hard," adds NAHB Chief Economist David Crowe. "As a result, most of the sales are coming from a smaller pool of buyers who have a more established credit history, are more likely to finance with higher cash down payments, and are purchasing higher-priced homes."

source:  National Association of Home Builders and Reuters


Mortgage foul-ups are accounting for a growing number of complaints recently filed with the Consumer Financial Protection Bureau. During the year the most complaints were about mortgages, loan modifications, and foreclosure activities by servicers.

CFPB also has been sending investigators into mortgage-servicing firms to check their accounts and uncover any “unfair and deceptive practices.” The bureau's auditors report finding some of the following offenses so far:

  • Private mortgage insurance premiums, which can increase a monthly mortgage payment by up to a few hundred dollars a month, were not always found to be canceled properly. Servicers are mandated by federal law to stop collecting private mortgage insurance premiums once the principal balance on a mortgage reaches 78 percent of the original value of the home. But CFPB found cases of a servicer falsely telling a borrower that the premium payments could not be canceled unless the loan was more than 2 years old, as well as cases of servicers not returning excess mortgage insurance payments to borrowers within the 45-day requirement that federal law mandates.
  • "Biweekly" mortgage payment plans weren’t always performed correctly by some servicers. The biweekly payment option requires half a month’s payment every two weeks rather than a full payment once a month. Such a plan can accelerate a payoff on the loan. But CFPB investigators uncovered a company that submitted payments monthly instead of biweekly and kept the extra money in its own account until the end of the year. The servicer would then make an extra monthly payment — which was less beneficial in the end to the borrower.
  • Misreporting of mortgages to national credit bureaus: In some cases, borrowers whose mortgage payments were lowered were then reported to have been foreclosed on. Also, some short sales were being reported as foreclosures. Both types of mistakes can greatly damage a borrower's credit score.
  • Several incidents have been uncovered in abuses in the transfers of servicing. Investigators found that some servicers had mistreated borrowers whose loans had modified payment terms after the servicing was transferred. For example, rather than honoring the modification terms, some servicers would insist on independently determining whether lower payments were offered properly by the previous servicer, which caused delays and extra paperwork for borrowers.

source:  Los Angeles Times