Economists change forecasts for housing
One thing is certain and constant in the field of forecasting changes in housing or other real estate: Economists always reserve the right to change their minds. And they often do.
This month (June) marks 43 years of writing this column about real estate and it’s been a challenge to keep track of the latest forecasts of credible economists.
For example, economic growth is expected to be moderate for the rest of the year, but housing is one sector that is expected to post solid gains, according to Fannie Mae’s newly released report from its Economic and Strategic Research Group.
Economists with mortgage giant Freddie Mac also released a report revising housing forecasts upward for the remainder of the year. Economists expect that with tight for-sale inventories home prices will rise 4.5 percent this year, revised up from 4 percent in a prior report, it was noted.
Fannie Mae economists note that mortgage applications for home purchases have moved up consistently for the last two months.
“While refinance applications have recently pulled back, the actual volume of both purchase and refinance originations earlier in the year came in stronger than we had projected,” said Doug Duncan, Fannie Mae’s chief economist. As such, Fannie Mae economists have raised their mortgage origination forecast to $1.46 trillion for this year.
“We are seeing positive developments in the housing space, supporting our forecast of moderate but broadbased improvement in 2015 compared to last year,” Duncan said as quoted in a report by the National Association of Realtors. Are mortgage interest rates still rising? On June 4, Freddie Mac released the results of its Primary Mortgage Market Survey, showing average fixed mortgage rates remaining near their highest level of the year before bond yields began moving even higher.
Thirty-year fixed-rate mortgages (FRM) averaged 3.87 percent with an average 0.6 point for the week ending June 4, 2015, unchanged from last week. A year ago at this time, the 30-year FRM averaged 4.14 percent.
The 15-year FRM this week averaged 3.08 percent with an average 0.5 point, down from last week when it averaged 3.11 percent. A year ago at this time, the 15year FRM averaged 3.23 percent. What is the first step a home buyer should take in preparing to purchase a home? One of the first concerns is to know your credit score. A new survey finds that house hunters who know their credit scores feel more prepared to buy a home.
Yet, just half of recent buyers say they checked their credit as soon as they considered purchasing a home, according to a survey, commissioned by Experian, of 250 recent and 250 future home buyers.
“No one likes to go into a lender’s office, whether buying or refinancing, and not know the state of their credit; it makes them feel helpless,” said Becky Frost, senior manager of consumer education at Experian Consumer Services.
“Our survey shows when people interact with their credit by tracking it and learning more about the factors that affect it, they feel more confident about their purchase power.” How do homeowners’ valuations of their residences compare with an appraiser’s view of the home? There is indeed a variance in a home’s valuation from the perspective of its owner and an apprais- er, according to Quicken Loans Home Value Index.
Appraisers valued homes 0.13 percent lower than homeowners’ estimates in February, according to the index.
In January, appraiser opinions were 0.18 percent higher than homeowners’ estimates.
The difference is only slight, but it does show the first divergence between owners’ price opinions and appraisers in more than a year. Despite the overall drop, appraiser opinions remain higher than homeowner estimates in 18 of the 27 metros analyzed.
“While it’s significant that appraiser opinions are now lower than homeowners’ nationally, this minimal difference is unlikely to derail a refinance or cause headaches for the homeowner,” said Bob Walters, Quicken Loans chief economist, as quoted in a NAR report. Why are downtown areas appealing to so many home buyers? Certain downtown areas do indeed appeal to increasing numbers of buyers. Many of those prospective buyers factor in population growth, ratio of residents to jobs, income growth, home vacancy rates, affordability of housing, and retail and office vacancy rates. How can a person find out about the history of an older home? You can trace expansions and contractions in the economy easily by home sizes and standard features, it was reported in Realty Times.
In the 1950s, suburbs grew quickly because of new highway systems that allowed homeowners to commute to their jobs. Yards grew larger, and homes sprawled on single-story foundations because land was cheap.
Post-war parents gave birth in record numbers to the baby boomers and decorated their homes with spaceage Sputnik Formica, luxurious wall-to-wall carpeting, built-in cocktail bars, and furniture-quality black-andwhite TV sets, the report noted.