Posts filed under “Real Estate”
The bond market seems to have had its own flash crash this week. The yield on the 10-year U.S. Treasury bond dipped briefly below 2 percent, as panicked equity sellers looked for a safe place to park their cash. Treasuries, of course, are the world’s option of choice, the safest and most liquid port during the storm.
Demand for bonds has helped drive down mortgage rates as well. Bloomberg News reported that “U.S. mortgage rates plunged, sending borrowing costs for 30-year loans below 4 percent for the first time in 16 months, as signs of a slowing global economy drove investors to the safety of government bonds.” Almost immediately, lower rates worked their way through the entire credit complex.
The average rate on 30-year fixed home loan is now 3.97 percent. To put this into context, the median U.S. home price is $219,800. Put down 10 percent and that $200,000 mortgage costs the homebuyer $951 a month. A decade ago the same mortgage would have cost this buyer as much as 6.34 percent. The monthly payment would have been more than 25 percent higher at $1,243.
The chart below shows the long decline in rates:
Under normal circumstances, this decrease in rates should have far reaching and beneficial effects on the economy. It would spur increased investment in real estate. Mortgage refinancings also would rise, and that would put a little more discretionary cash in the hands of consumers each month.
Source: National Association of Realtors Expensive home sales have been in the news a lot these days. The Wall Street Journal wrote about a “palatially priced” mansion in Florida listed at $139 million. The Los Angeles Times featured a Beverly Hills mansion listed at $85 million — interestingly, it was built on speculation. Business…Read More
Why Aren’t More Renters Becoming Homeowners? Andreas Fuster, Basit Zafar, and Matthew Cocci Liberty Street Economics Recent activity in the U.S. housing market has been widely perceived as disappointing. For instance, sales of both new and existing homes were about 5 percent lower over the first half of 2014 than over the first half…Read More
Bespoke: Below is a look at how much home prices have increased for each city tracked by S&P/Case-Shiller since the housing bust lows. As shown, San Francisco remains by far the biggest winner with a gain of 66%. Detroit and Las Vegas have seen the 2nd and 3rd largest increases in price at 51% and…Read More
Source: RealtyTrac Each quarter, RealtyTrac releases its “Home Equity and Underwater Report.” According to RealtyTrac’s data, “9.1 million U.S. residential properties were seriously underwater.” Mortgages that are “seriously underwater” exceed a property’s value by at least 25 percent. They also account for 17.2 percent of all properties with a mortgage. That number decreased slightly…Read More