Interest rates fell this week on account of the recent volatility of the ten-year treasury yield. It’s possible they may keep falling as fears of the spreading Coronavirus make the markets more volatile due to the economic slowdown in China. There’s a lot of pressure on the federal reserve to lower interest rates and the vice chairman of the fed, Richard Clarida, said the Central Bank is monitoring the situation closely but it’s too soon to know exactly what should be done.
Mortgage applications increased 1.5% from one week earlier. Next week’s numbers will show just how much the drop in the U.S. Treasury yields will affect mortgage activity.
Pending Home Sales Report
Yesterday the National Association of Realtors released the Pending Home Sales report for January and reported a climb of 5.2%. This is the second-highest monthly figure in over two years.
It’s interesting to note the west saw a small drop in month-over-month contract activity, the other three major regions saw pending home sales grow. All four regions are up year-over-year. The south saw the highest pending home sales growth of 8.7% in January.
The Housing Supply Shortage
The housing supply shortage is something we’ve been hearing about for a while. This week, Freddie Mac released a report on the shortage and provided some startling numbers. Estimates show that we are undersupplied by 3.3 million units and the shortage is rising at 300,000 units per year.
Local Market News
Every month I like to take a look at the hottest areas on the MLS and see what areas of DFW have the tightest supply and lowest months of inventory. This month you’ll hear some familiar areas that seem to always make the list.
Coming in at under 1 month of inventory and the hottest areas on the MLS we have:
We will have to see what happens to rates as the spread of the coronavirus keeps making the headlines in the news. If this continues and the world economies keep on their downward trend, it’s likely rates will see another drop.
That’s the update for this week. Thanks for spending the last few minutes with me and I’ll see you next week.
Interest rates are up the tiniest bit to 3.49% with .7% in fees and points for a 30-year fixed-rate mortgage. What’s happening in the market with these low interest rates? Well, homebuying activity is increasing to the tune of about 15% from a year ago when you look at mortgage applications. Residential construction activity is picking up to now be at a pace that’s the highest it has been in a decade.
This week a report on the State of Luxury 2020 was released from Coldwell Banker. It takes an in-depth look at emerging luxury markets and buyers and what’s driving those markets. Today’s luxury buyer now considers things like lifestyle preference, job opportunities, property value differentials, and the desire to reduce taxes.
The top 2020 luxury markets to watch are now Boise, Idaho, Charlotte, North Carolina, Colorado Springs, Colorado, Cincinnati, Ohio, and Fort Worth, Texas.
A few other interesting stats for you, Raleigh-Durham, North Carolina had the shortest median days on market at only THREE days on market. Collin County, Texas provides the most affordable price per square foot for luxury single-family homes at a median price of $164 per square foot. And the place with the most expensive price per square foot? Hold on to your seats folks. It’s Malibu, California with a median price per square foot of $4,269.
In local market news, January sales data is in. The main takeaways for single-family home sales in Dallas-Fort Worth are:
Unless we get a major economic shock from out of the blue, I predict the next few months will be a continuation of the current trend we’re in. That’s the trend of low interest rates, increasing demand, and increasing prices.
For the third week in a row, rates have dropped and the experts over at Freddie Mac say the signals all point to home purchase demand continuing to rise over the next few months. Rates are currently at 3.45% with .7% in fees and points for a thirty-year fixed rate mortgage.
The lowest on record was the week ending on November 21, 2012 when interest rates for a 30-year mortgage were at 3.31%.
One theory on what’s driving mortgage rates lower is, believe it or not, the coronavirus. How? Well, experts predict the coronavirus will begin to slow economic growth in China. That uncertainty brought down the 10-year treasury yield, which then brought down interest rates.
Mortgage applications increased from the week before by 5% and they’re up 11% from this time a year ago. Applications are currently at their highest levels since May 2013.
In other mortgage news, credit availability decreased in January. It wasn’t by much but the Mortgage Credit Availability Index fell by 2 basis points in January. This means that lending standards are getting stricter. This decline came from the reduction of low credit score, high-LTV programs.
The Texas Real Estate Center at Texas A&M University released their Texas Housing Insight Report. The big takeaways from the report are:
The numbers from 2019 show, at least to me, that growth was pretty controlled last year. I’d predict this year builds on that growth a little more since there was a lot of hesitation last year with buyers due to economic uncertainty. Rates appear to be a good driver of getting buyers back in the game for purchasing a home this year.
Jennifer Shannon is a Texas real estate agent and broker, licensed since 2006.