Last Dance, Last Chance to…..Refinance

Over the past 6 weeks, interest rates have increased by about .75%. So now, rates on the 30 year fixed range from 4.0%-4.5% (depending on loans size, credit, property type, value, etc.) while 15 year fixed loans are 3.25%-3.75%. This is the result of mostly positive economic news; increased consumer confidence; tremendous stock market gains; recovering in the housing market; and last, but not least, the feeling that the Federal Reserve will slow and eventually stop buying billions of dollars in Treasury Bills. So, I suggest that if you have one of the following types of loans, you contact me to see if you qualify to lower your payments. Similarly, you might want to let your friends and family know as well: 1. If you have a 30 year fixed with a rate of 4.5% or greater 2. If you have a 30 year fixed and are considering switching to a 15 year fixed 3. If you have a 15 year fixed of 4% or great 4. If you have ANY adjustable rate mortgage with less time remaining on the fixed period (i.e. 5 years for a 5/1 ARM, 7 years for a 7/1 ARM, etc.) than the time you intend to remain in your house 5. If you are looking for cash to pay down debt; invest in a business or for education costs. Also, of course, as the real estate market heats up, we are getting a lot more requests for purchase loans. We can help with this by issuing pre-approvals and quick lender commitment letters. We are mortgage bankers and can approve and close loans within a very short period of time.

The most common question I hear (after, “Do you think the rates are going lower?”) is, “How is the real estate market?”  As much as I would like to say “it is great,”  I don’t think that is quite the case.   The real answer is “it depends.”

It depends?

Yes, that is correct.  It depends first on what year is used for comparison. Are we looking at a normal year? That would be a year that is BC (i.e. Before Crash)? Comparing it to last year? Or the Badland years of 2008-2011?

And, more than that, it depends on the area you are asking about.  Are you asking about Manhattan or parts of Brooklyn that are red hot again but suffering from a lack of inventory?  Or are you speaking about most of the suburbs of New Jersey, Westchester and Long Island (other than the top areas), which are still struggling?

Some Statistics

1. Countrywide:  Led by areas in the West like Las Vegas and Phoenix (which is up 23% from last year) and parts of Florida  overall home prices are up 9.3% from February 2013 to February 2012 according to Case-Shiller,.  This is the largest increase in the last 7 years. In addition, February 2013 prices were higher than prices in January 2013 (and those were higher than those in December 2012).  But, this is a regional increase. So, if the average is up 9.3% and Phoenix is up 23% then there must be areas that are down about 14% either individually or cumulatively (using simple math)!

According to the National Association of Realtors, buyer traffic was up 25% from last year while there were 17% less houses for sale.  So, what does that mean?  It means that there are more people looking for less houses so that price wars are occurring. But, it does not mean that either more houses are selling or overall the market is significantly better. As it stands now, prices are still  down 30% from their peak.

2. Manhattan: The data from the major real estate brokerage firms is all over the map on this.  Depending on which firm, you trust (and whether or not you factor in average busting sales like the $88M one from 2012), the prices are either up either 6% or down slightly.  However, contracts are up 15% through March from the same period last year according to StreetEasy. This is probably a pretty good indication of activity. My unscientific opinion is that Manhattan is doing well but also suffering from a lack of inventory and difficult lending standards for condos and coops.

3. New Jersey:  Prices have increased by about 5% this year over the same period last year. But, again, like most of these numbers this one is deceiving.  The majority of these increases is confined to the pricier suburbs in Northern New Jersey.  And, even with these increases, prices are still only at 2003 levels.  Those suburbs are seeing some bidding wars as well. However, for the majority of the State, the home prices are still relatively flat (albeit not likely to go down further).  Though I don’t have statistics on Long Island or Westchester, my empirical data seems to indicate a similar trend as the one in New Jersey (i.e. higher priced increasing with middle priced areas holding steady).

Conclusion:  Activity in home purchases has certainly increased this spring as have prices.  We are certainly heading in a positive direction and if rates stay low should continue this way. But, we are far from a good or normal market.  My standard response to “How’s the Market” (other than “It depends”) is “it’s not terrible!”  After the past few years, I will take that all day!

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