Mortgage Rates hit another all-time LOW

The average U.S. rate for a 30-year fixed mortgage dropped to 3.15% last week. It is the lowest ever recorded in a Freddie Mac data series that goes back almost five decades.

The rate fell from 3.24% last week, setting a new record low for the third time in three months, according to the report.

Mortgage rates have fallen after the Federal Reserve began buying mortgage-backed securities to stimulate demand, said Chris Low, chief economist of FHN Financial in New York. The Fed has purchased more than half a trillion dollars of MBS after restarting in March a bond-buying program it used during the financial crisis more than a decade ago.

When the initial plan of buying $200 billion of MBS didn’t lower financing costs, Fed Chairman Jerome Powell said on March 23 the central bank would buy whatever was needed to move rates. It worked.

“The Fed is by far the biggest player in the mortgage markets right now, the biggest buyer of mortgages, and because of that, they have almost complete control over the interest rate,” Low said.

That means the central bank has the ability to stimulate home sales by driving rates to lows that most people wouldn’t have thought possible a few years ago, said Low.

“Every economist had doubts about how housing would fare during COVID-19, but what we’ve seen has been absolutely remarkable,” Low said. “Home sales are holding up extraordinarily well, and that’s in large part because of the mortgage rates.”

Last week, applications for mortgages to purchase homes gained for the sixth consecutive week to a level that was 6.7% higher than a year ago, when the U.S. was having a normal “spring homebuying season”.

A seasonally adjusted index measuring purchase applications jumped 9%, the Mortgage Bankers Association said in a report on Wednesday. The so-called purchase apps were up 54% from early April when most U.S. states were under lockdown orders to keep people at home in an effort to stem the spread of COVID-19.

Is now the right time to purchase a new home or make investments in this real estate market?

Talk To Tammy, 636.931.9100 or via tammy@talktotammy.com

Will Coronavirus Create Multifamily Investment Opportunities?

The past several years have been marked by an increase in average rent prices in many major U.S. cities, a lack of affordable multifamily housing, and a tight rental market. The pandemic and potential recession that may result isn’t likely to lead to more affordable housing, but it could lead to opportunities for some investors ready to cash in on properties in secondary markets.

Here are 3 ways that the multifamily housing market might be impacted by the pandemic.

1. House Foreclosures Could Lead to More Rental Demand

For the immediate future, tenants may be stuck in place, unable to move either due to logistical or economic reasons. Some multifamily buildings are prohibiting new residents, while others only permit remote showings, which can make it harder for prospective tenants to make a decision.

A report from Attom Data Solutions showed nationwide foreclosure lows in February 2020. However, Chief Product Officer Todd Teta predicts a rise in foreclosures once courts lift the ban on foreclosures and evictions. This could lead to more people seeking apartments, which could create a market ripe for landlords.

Much depends on what happens once the country re-opens—and when that phased reopening occurs.

“We want states to open up at a safe pace, but obviously, as the economic situation gets worse, that will impact the opportunities available in the market,” says Brant Brown, COO and CFO of Westmount Realty Capital, a commercial real estate investment and development firm in Dallas. “We’re looking at what the unemployment story is going to be, what collections are going to be, and how quickly the states re-open.”

2. Tighter Lending Restrictions Will Force Investors Not to Over-Leverage

The NMHC report spotlights tighter lending restrictions, showing the Equity Financing Index dropping from 61 to 13, and the Debt Financing Index plummeting from 68 to 20.

According to the report’s statistics, 75% of respondents said that equity financing was less available than in the three months prior; 71% of respondents said debt financing conditions were less favorable.

Especially now, Brown advises investors to avoid over-leveraging property or not leaving enough cash in the bank for repairs and emergency expenses, which could include tenants not paying rent due to job loss.

“A lot of multifamily operators have been running their properties cash-poor. In times like this, it really catches up with them,” Brown says.

In spite of low interest rates, underwriters will be looking to make sure investors have sufficient capital to manage the property.

3. Investors could find opportunities in suburban markets.

The second month of the pandemic in the U.S. found many city-dwellers temporarily fleeing their apartments for more space and a change of scenery.

“The fundamental story of [urban] markets is attractive, so I wouldn’t place bets on what the long term [impact] will be,” Brown says. “In the short run, a lot of people are very concerned about [the spread of the virus], and they’re going to vote with their feet.”

Cities may become less desirable places to live as the risk of infection continues to weigh on communities and remote work has people spending more time at home. Residents may seek larger apartments with more amenities in less populated areas, says Brown. “Wherever they move, it probably won’t be those city centers.”

Should I Sell My Home During The Coronavirus Pandemic Or Wait?

Jefferson County is considering easing restrictions on its stay-at-home order because of the coronavirus outbreak -businesses in downtown Hillsboro and throughout Jefferson County will be finding out soon about new guidelines for operations when they reopen on May 4th.

In the residential real estate market, we’ve begun to make the changes necessary to have a functioning seller market.  Here are some of the changes that have been made in the Greater St. Louis Metropolitan Area:

  • No more open houses crammed with people
  • Wearing masks and gloves during showings
  • The institution of a new contract rider for coronavirus
  • Title services are now also done as a drive up service.

County Executive Gannon says businesses will be operating under a new normal with some restrictions in place when they reopen. He hopes to have those new guidelines finalized soon. The stay-at-home order ends May 3rd.

Don’t sell your home because of a pandemic –  don’t sell your home because your neighbor is panicking.  Look at all the data you have in front of you and make a decision that you are most comfortable with. 

We are here to help you find the perfect buyer, call: 636-931-9100 !

Will COVID-19 Shift Conditions to a Buyer’s Market or Seller’s Market?

The current market stall in response to COVID-19 presents a unique challenge for market tracking moving forward, and likewise for buyers and sellers trying to understand the housing market that they are walking into. Months’ supply represents the dynamic between listings and sales. As each side of the homebuying transaction responds distinctly to the COVID-19 situation, this dynamic shifts, and “buyer’s market” and “seller’s market” labels along with it.

So, will COVID-19 shift conditions to a buyer’s market, or a seller’s market?

On the one hand, the rate of new listings entering the market has gone down dramatically, adding very little new inventory to the national pool of listings. Likewise, there are fewer closed sales due to social distancing measures. The lack of new listings bottlenecks the potential of sales. If the downturn is roughly equal in listings and sales, then months’ supply as a metric would continue its current trend.

However, as the market resets and picks back up later in the year, listings and sales will likely ramp up at different times, which will have distinct effects on this buyer/seller relationship. As listings reach a critical mass to entice prospective buyers, this accumulation of listings will drive up months’ supply figures, temporarily shifting us to a buyer’s market. Then, as the rate of buyers catches up to listings, this sales and listings dynamic will continue to balance out. Where it ends up at the end of the year, however, remains to be seen.

FAQs during these hard times…

I’m worried about my credit score. What should I do if a miss a few payments due to the crisis?

The CARES Act implemented provisions to protect credit scores from January 30, 2020 through 120 days after enactment of the national emergency. If customers are making payments, or made arrangement to not make payments, customers must be reported as being current. If a customer was delinquent, but was able to make an arrangement with the servicer and is now current, then their account must be reported as current. The important thing is to reach out to your servicer, bank or credit card company if you are having trouble making your payments.

I have heard that the FHA, Fannie Mae, and Freddie Mac have raised rates and fees on borrowers with lower credit scores or smaller down payments?

Fannie Mae and Freddie Mac have not made any changes to credit scoring or down payment requirements. The only change they have made for borrowers is to allow MORE flexibility in how a lender can verify employment. Many individual lenders are adding their own, higher standards on these products. The rational is that the cost of servicing these loans has surged due to the widespread forbearance that is taxing servicers’ resources. Under forbearance, the servicer must continue to pay PITI to the investor, but the sheer volume of forbearance to deal with the COVID-19 response is unprecedented. Since lower-credit borrowers are more likely to take forbearance and servicing is harder to get, lenders are less willing to extend this credit regardless of the FHA or GSEs’ standards.

I’m not sure I will be able to pay or file my taxes on time for 2019; What do I do?

The IRS has delayed the due date to file and pay any taxes that are due to July 15, 2020, without penalties or interest. For more IRS information, check here.

We’re still here for all of your real estate needs, call: 636-931-9100!

Your #TalkToTammyTeam