Federal Reserve Projections: What St. Louis Homebuyers and Sellers Need to Know

The latest Federal Reserve Economic Projections, released on June 12, 2024, provide valuable insights into the future economic landscape that will impact homebuyers and sellers in St. Louis. The Federal Open Market Committee (FOMC) anticipates steady real GDP growth of around 2.0% from 2024 to 2026, which indicates a stable economic environment for making real estate investments. This projection is reassuring for those considering buying or selling homes, as economic stability often correlates with a steady housing market.

Interestingly, the unemployment rate is projected to hover around 4.1% during the same period, reflecting a healthy job market. For potential homebuyers, this suggests a favorable environment for securing employment and stable incomes, which are critical for obtaining mortgage approvals. On the other hand, sellers can expect a steady demand for housing driven by a robust job market.

Inflation rates are projected to ease, with core PCE inflation expected to decrease from 2.8% in 2024 to 2.0% by 2026. This trend is crucial for maintaining purchasing power and affordability in the housing market. Lower inflation rates can help keep mortgage rates in check, making homeownership more accessible for many families in St. Louis.

For a detailed breakdown of these projections and their implications for the St. Louis real estate market, please refer to the full report below.



 

Refinance Activity Surges Despite Rising Mortgage Rates – Purchase Applications Fall

Last week, the interest rates for 30-year fixed-rate mortgages climbed past the 7 percent mark. Despite this increase, as the chart below illustrates, there was a significant 10 percent increase in refinancing applications. This is in sharp contrast to a 5 percent decline in purchase applications. The growth in the refinancing segment is notable, representing 33.3 percent of the total application volume, up from 30.3 percent the previous week. This surge in refinancing interest is particularly intriguing, given the highest reported 30-year mortgage rates in over a month, at 7.01 percent.

Joel Kan, MBA’s Vice President and Deputy Chief Economist, attributed the rising rates to the Federal Reserve’s cautious stance on adjusting policy amidst persistent inflation and resilient economic indicators, including strong employment data. Despite the unfavorable rate environment, the demand for refinancing, especially VA refinancing, remained robust.

Other notable trends include a decrease in average loan sizes, with purchase loan sizes—often viewed as a proxy for home prices—dropping to $449,400 from $453,000. Additionally, there was a shift in the composition of mortgage applications, with increases in FHA and VA loan shares.

So, what explains the rising number of homeowners refinancing their mortgages even with rising mortgage interest rates? There are numerous reports indicating that many homeowners across the country are becoming cash-strapped and having a difficult time paying bills, thus resorting to pulling out equity from their homes, even if it means accepting a higher interest rate. I’ve also observed reports indicating that consumer credit card debt is at historically high levels, with interest rates on this debt being astronomical. This situation is prompting people to refinance their home loans again, even at higher rates, because even though their mortgage may be at a higher rate, it still appears to be a bargain compared to the 27 or 28% on a credit card. I haven’t seen enough verifiable data to confirm if either of these situations is true, but both are plausible.


Refinance Index vs 30 Yr Fixed Mortgage Chart

(click on image for live, interactive chart)

Refinance Index vs 30 Yr Fixed Mortgage ChartHous

Analyzing Jerome Powell’s Latest Press Conference: Implications for Mortgage Rates and the St. Louis Real Estate Market

Federal Reserve Chair Jerome Powell’s press conference yesterday, along with the Federal Open Market Committee (FOMC) statement, provide crucial insights into the Fed’s economic outlook and monetary policy. These insights are pivotal for understanding the trajectory of mortgage rates and the St. Louis real estate market.

Powell’s Press Conference Highlights

  • Economic Activity and Rate Adjustments: Powell noted, “We have raised our policy interest rate by 5-1/4 percentage points… Our actions have moved our policy rate well into restrictive territory.”
  • Housing Sector Observations: He remarked, “After picking up somewhat over the summer, activity in the housing sector has flattened out… largely reflecting higher mortgage rates.”

Key Takeaways from the FOMC Statement

  • Economic and Inflation Outlook: The FOMC stated, “Recent indicators suggest that growth of economic activity has slowed… Inflation has eased over the past year but remains elevated.”
  • Banking System Resilience: The statement highlighted, “The U.S. banking system is sound and resilient. Tighter financial and credit conditions… are likely to weigh on economic activity.”

Anticipated Interest Rate Movements

  • Future Rate Decisions: The FOMC announced, “The Committee decided to maintain the target range for the federal funds rate at 5-1/4 to 5-1/2 percent.”
  • Monetary Policy Considerations: “In determining the extent of any additional policy firming… the Committee will take into account the cumulative tightening of monetary policy,” indicating a measured approach to future rate changes.

Implications for Mortgage Rates and St. Louis Real Estate

  • Mortgage Rate Trends: Combining Powell’s remarks with the FOMC statement suggests a period of careful assessment in rate adjustments. This could lead to stabilization or moderate fluctuation in mortgage rates.
  • Market Dynamics in St. Louis: Stable or gradually adjusting mortgage rates, alongside ongoing economic and inflation monitoring, could result in a balanced real estate market. Buyers and sellers in St. Louis may experience a period of relative predictability and sustained market activity.

Conclusion
The integrated perspectives from Jerome Powell’s press conference and the FOMC statement offer a detailed view of the Federal Reserve’s stance on economic conditions and monetary policy. For the St. Louis real estate market, these developments suggest a period of cautious optimism, with potential stability in mortgage rates and a balanced market environment. Real estate stakeholders should consider these insights in their market strategies and decision-making processes.


Mortgage Rates Take a Slight Dip Amidst Steady Federal Reserve Rates

In the ever-evolving landscape of the housing market, prospective homeowners and investors alike keep a close eye on mortgage interest rates. Today, there was a modest decrease in the 30-year fixed-rate mortgage interest rate, now hovering between 7.5% and 7.6%. This shift comes in the wake of the Federal Reserve’s recent decision to maintain the Overnight Federal Funds Rate at a range of 5.25% to 5.50%.

This current rate represents a slight relief from the recent peak in , yet it remains a figure that echoes the rates of over two decades ago. To put this into perspective, the last time mortgage interest rates soared to such heights was in late 2000, a reality that today’s borrowers may find daunting.

The first chart below illustrates the trajectory of mortgage rates over the last several years while the chart below it is a long-term look at rates going all the back t0 1971.

Despite the Federal Reserve’s pause in rate hikes, as noted in their latest meeting, the market has responded with a cautious optimism that is reflected in today’s slight rate reduction. Federal Reserve Chairman Jerome Powell has been clear that this holding pattern does not signal an end to the tightening cycle, but rather a strategic pause, with the central bank retaining the option to adjust rates if inflation trends shift.

For homebuyers, this dip presents a nuanced opportunity. While rates are not at the historic lows seen in recent years, any decrease can translate to significant savings over the life of a mortgage. It’s a reminder that in the world of real estate financing, timing, and vigilance are everything.

As we continue to navigate through these turbulent economic waters, stay tuned for updates on interest rate trends and their implications for the real estate market. Whether you’re looking to buy, sell, or simply stay informed, understanding the dynamics of mortgage rates is key to making empowered decisions.


Mortgage Interest Rates (MND Chart)

(click on chart for live, interactive chart)
Mortgage Interest Rates (MND Chart)

Mortgage Interest Rates – 1971-Present – 30 Year Fixed-Rate

(click on chart for live, interactive chart)Mortgage Interest Rates - 1971-Present - 30 Year Fixed-Rate

 

Do the Fed Funds rate and M2 money supply really matter to the St Louis real estate market?

For the past several months there have been many reports anticipating the moves of the Federal Reserve regarding interest rates then followed by tons of articles, blog posts and videos analyzing then predicting the impact of the Fed’s decision on the economy.  The other popular topic in this area is the “Money Supply”, usually M2 money supply and whether it’s increasing or decreasing as well as the impact on the economy.

Should St Louis homeowners and potential home buyers really care about the Fed Funds rate or M2 money supply?

First, let’s talk about the Fed Funds rate and what it is, what it is intended to do and the affect it can have on the real estate market.  The Fed Funds rate is the interest rate at which banks lend to each other overnight to maintain their reserve requirements. This rate is set by the Federal Reserve, and changes to the rate can have a ripple effect throughout the economy, including the mortgage and housing markets. When the Fed lowers the Fed Funds rate, it can stimulate economic growth by making it cheaper for banks to borrow money, which can lead to lower mortgage interest rates. Lower mortgage rates make it more affordable for homebuyers to finance their purchases, which can increase demand for homes and drive up prices. Conversely, when the Fed raises the Fed Funds rate, it can lead to higher mortgage interest rates, which can slow down the housing market and lead to lower demand and prices.

Next, the the M2 money supply.  The M2 money supply includes cash, checking accounts, savings accounts, and other liquid assets that can be easily converted into cash. When the M2 money supply increases, it can stimulate economic activity by making more money available for borrowing and spending. This can lead to lower mortgage interest rates as well, as banks have more funds available to lend out. However, if the M2 money supply increases too rapidly, it can lead to inflation, which can cause mortgage interest rates to rise.

So, as you can see, both the Fed Funds rate and M2 money supply can have a significant impact on the cost of a home mortgage as well as home prices so I would say the answer to the question I posed is “yes”.  Granted, we don’t all need to become economists or stay up late at night pouring through spreadsheets and date, but to be aware of factors that affect the economy as a whole and as a result, the real estate market we’re in, would be wise.

How can knowledge of the Fed Funds rate and M2 money supply help me as a home seller or buyer?

The short answer is, it gives you a little insight into perhaps where things are headed which may help you make the decision to buy or sell sooner or later. For example, perhaps  you are contemplating buying an home but anguishing over the fact the mortgage interest rates are double what they were a year or two ago and you’re thinking maybe you should wait until things settle down.  Well, if you see the Fed Funds rate getting increased with talk of more increases while that is no guarantee mortgage interest rates will increase as well, as I explained above, it’s certainly an indicator that is a likelihood.  Therefore, you may decide it’s better to make a move now than later.

What’s an easy way to track this stuff?

I have the answer for you.  The charts below are two of the many charts and other information available on St Louis Real Estate Search as well as from MORE, REALTORS® .  The first chart shows the relationship historically between St Louis home prices and the M2 Money Supply.  Generally, they follow the same trend but, when the trend for one changes, like it did with St Louis home prices (the red line on the chart) beginning in the late 90’s through the housing market bubble burst after 2006, something happens to bring them back in line.  As you can see, starting a little over 3 years ago the pace at which M2 was growing outpaced St Louis home prices, but St Louis home prices quickly caught up. Now it’s the opposite and it looks like both a making a downward correction.

The bottom chart shows the close relationship between the Fed Funds rate and mortgage interest rates.  With little exception, when the Fed Funds rate increases or decreases, mortgage rates follow. For the past year, the Fed Funds rate has increased and the trend is upward so I wouldn’t expect to see falling mortgage interest rates anytime soon.

Continue reading “Do the Fed Funds rate and M2 money supply really matter to the St Louis real estate market?

The Coming Recession and Its Potential Affect on St Louis Home Prices

Ever heard the expression “It’s not if, but when..”?  That is something that I’ve heard for a while now about a recession.  With everything that has happened to our economy including rising interest rates, rising inflation, the government printing more and more currency and running up greater debt, it seemed inevitable we would see a recession.  To officially be in a recession, the GDP (Gross Domestic Product) has to fall for two successive quarters.  For the first quarter of this year, GDP declined at an annual rate of 1.6%.  The second quarter GDP numbers won’t be released until later this month (July 28th) however, the GDPNow forecasting model of the Federal Reserve Bank of Atlanta is forecasting a decline of 2.1% in GDP for the 2nd quarter of this year at this point.  If their forecast is correct, we will officially be in a recession.

What happens to St Louis home prices during a recession?

There are many factors at play in every recession that make them unique, such as unemployment rates, interest rates, etc, making it unrealistic to think that home prices are going to behave the same way during every recession, however, I thought it would be worth looking at what happened during the last couple of recessions.

2020 Recession (Q1 and Q2) 

We had a short recession in early 2020 caused primarily by COVID that only lasted the minimum period of two quarters.  During this period, as the chart below shows, St Louis home prices continued to increase at a fairly consistent rate.  In 2019 the median price of a home in the St Louis MSA was $188,575 and in 2020 it was $208,000, an increase of 10.3%.  Then in 2021, the year after the recession, the median St Louis home prices was $227,000, an increase of 9.1% from the year before.

Continue reading “The Coming Recession and Its Potential Affect on St Louis Home Prices

Interest Rates Hit Highest Level in Over 2-Years

Mortgage interest rates were at 3.69% for a 30-year fixed-rate loan as of this past Thursday, February 10, 2022., according to Freddie Mac’s Primary Mortgage Market Survey®.  As the chart below illustrates, mortgage interest rates hit a low of 2.77% in August of 2021 and have pretty much been trending upward since.

Within the last few days, there have been a lot of reports in the media projecting mortgage interest rates to go higher this year.  A lot of it is based on the current inflation rates which are not good so if the economy and rate of inflation improve, so would mortgage rates but time will tell.  Personally, as of today and subject to any new major disruptions, I think rates in 2022 will stay in the mid 3% range and climb to the upper 3’s, perhaps 3.9% but could very well go over 4% if the Federal Reserve raises rates as much as is currently rumored now.

Mortgage Interest Rates – 30 Year  Conventional Loan

(click on chart for live, interactive chart)

Mortgage Interest Rates - 30 Year  Conventional Loan 

 

Mortgage Interest Rates….How low can they go??

For quite a while now we have enjoyed the positive effects on the real estate market from low mortgage rates but it looks like it’s going to get even better!  Yesterday’s announcement by the Fed of the emergency step of lowering the benchmark U.S. interest rate by one-half of one percent, in an effort to offset the negative effect tot eh financial markets from the coronavirus will likely lead to even lower mortgage interest rates.

What’s the connection between the federal funds rate and mortgage interest rates? This is something often asked not only by homebuyers but is even within the real estate community as since the Federal Reserve doesn’t “set” mortgage rates, the connection is not always clear.  I’m not an expert in this area by no means, but I have a decent understanding of it and will share it from the perspective of the most popular home mortgage, the 30-year fixed-rate mortgage.  First, we have to understand where the money for those mortgages comes from.  It comes from investors, investors that compare an investment in 30-year mortgages to other comparable investments.  One of those comparable investments would be the 30-year treasury.

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Strong Economy and Low Inflation Prompt Fed Reserve To Lower Interest Rates

Yesterday afternoon, the Federal Reserve released a statement that was quite a vote of confidence for how the economy is doing.  The Fed Reserve’s statement included “…the labor market remains strong and that economic activity has been rising at a moderate rate. Job gains have been solid, on average, in recent months, and the unemployment rate has remained low.” and went on to say “Market-based measures of inflation compensation remain low;”.

As a result of the positive economic conditions, the Federal Open Market Committee announced it would lower the target range for the federal funds rate to 2 to 2-1/4 percent.  The committee went on to give a very positive outlook on the future economy as well saying that “sustained expansion of economic activity, strong labor market conditions, and inflation near the Committee’s symmetric 2 percent objective are the most likely outcomes…”.

Will the move by the Fed Reserve cause lower mortgage interest rates?

It’s hard to say if this announcement will prompt immediate lower interest rates as the mortgage market takes a little longer view of things.  However, while we don’t know if mortgage rates will decline or, if so by how much, I think, absent some major shift or change in the economy,  it is safe to say that mortgage rates are not going up at this time or in the very near future.

Mortgage interest rates have been at historic lows for years…

Continue reading “Strong Economy and Low Inflation Prompt Fed Reserve To Lower Interest Rates

St Louis Home Prices Verses Rent Continues To Show Value In Home Prices

There are several ways to look at home prices and  home affordability as well as to argue the merits of homeownership versus renting, however, one my favorite metrics to consider along these lines is the relationship between home prices and rental rates.  Most home buyers, that are seeking a home to live in, never consider what the home they are considering purchasing would rent for, since that is not their intended use.  However, there is a relationship between home values the potential rental income in that there is a tipping point reached when the cost of owning a home exceeds the cost of renting a comparable home in the same neighborhood by too much, there becomes an incentive to rent rather than buy.  Along the same lines, if rental rates get so high that, for about the same money, or even less, one could buy the home they are renting, there exists a strong incentive to buy a home.

With this in mind, when you look at the chart below from the St Louis Federal Reserve, which shows the St Louis home price index, the blue line, and the Consumer Price Index for Rent, the red line, you can see there is a pretty significant gap between the two.  The chart goes back to 1975 and, as you can see, historically the home price index and CPI for rents have increase at relatively similar rates, with home prices lagging slightly behind from about 1980 through around 2004 but, even then, there was a pretty similar trend.  As the housing bubble in 2006 approached, you can see the home price trend shot upward and past rents only to fall sharply around 2008 after the housing bubble burst.  Since hitting bottom around late 2011, home prices have been trending upward, but, as illustrated, there is a much larger gap between home prices and rents then is the historic norm which is a good thing with regard to home prices. Based upon what I see on the chart (you can click on the chart to be taken to our live, current version which is interactive) I would expect the gap between rents and home prices to close at some point in the near future.  This can be accomplished in one of two ways:  home prices can rise at a greater rate than rents rise, or rents can fall or remain flat, or, of course, some combination of the two.  In either event I think this is good data to support sustained home prices and also shows that buying a home could well be a better investment than renting.

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Home Affordability In St Louis Declining With Increasing Home Prices – Will Home Prices Suffer?

It seems almost crazy to even throw out the idea of an adjustment in St Louis home prices or, perhaps even, any sort of slow down in the rate of home price appreciation given that the inventory of homes for sale is so low in so many parts of the St Louis area, however, maybe it’s something to look at.  For anyone that has been reading what I have written here over the past 8+ years, you will hopefully know that I am not a “gloom and doom” guy at at all, but I do share my honest outlook on the market.  Having said that, I do feel home prices are something worth taking a look at.

What is causing the concern about home prices?

For starters, new housing affordability information was just released yesterday by ATTOM Data Solutions which shows home affordability in the St Louis area has eroded somewhat.  The table below, based upon the ATTOM data, shows what percentage of the average wages for the area are needed to make monthly house payments on a median-priced home with a 30-year fixed rate mortgage and a minimal downpayment of 3%.  It also shows how much, on a year over year basis, income has risen in that county versus how much home prices have increased.  As the table shows, it takes a pretty big chunk of pay to pay for the typical median priced home today and, in most cases, home prices are rising at higher rates  than income is rising.  Even if the year over year income/home price increase looks ok, home prices have been on the rise here for several years so if we look at a 5 year period home price growth is outpacing income growth.

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4 Reasons Why You Should Buy A Home Now In St Louis

For those that have been reading my articles for a while, you know I am not a Pollyanna when it comes to the real estate market, opting instead to tell it like it is, even when the news is not so encouraging.   For that reason, as well as the data behind my opinion, I think my suggestion that now is a good time to buy a home in St Louis should be considered to be a credible opinion from an industry insider.

So, why buy a home in St Louis now?

  1. Interest rates are LOW. As the chart below shows, the current average 30 year fixed rate mortgage interest rate in the U.S. is 3.65%, almost an historic low.  Interest rates are not forecasted to remain this low.  Freddie mac, as the table below shows, is forecasting that mortgage interest rates will rise this year to 4.5% by year end and continue to rise in 2017 until hitting 5.25% by the end of 2017.  An increase from the current rate, even to just the projected rate by year-end of 4.5% increases the payment on a typical St Louis home by over 10%, therefore, the same money buys less house!
  2. Home prices are on the rise.  As the chart below shows, St Louis home prices have risen about 4% during the past year and the trend has been fairly consistent.  As the median list prices show (the blue line on the chart) list prices of homes for sale is on the rise at a greater rate than the increase in recent sold prices.  Granted, this may be the result of overly optimistic sellers that believe spring will bring increased home prices (as is the norm) but even if prices remain flat, increased interest rates will still make the home more costly.
  3. Gas prices are low and forecasted to remain the same.  As the chart below from the U.S. Energy Administration illustrates, gasoline prices this year have hit the lowest price level in about 14 years and the forecast for the rest of this year and through 2017 shows gas prices remaining low.   This, along with the other issues noted, should help the St Louis real estate market remain healthy and fairly strong in the short term which will most likely result in continued price appreciation, particularly for areas that are farther out and subject to gas prices.
  4. More affordable to buy than rent but may change soon.  There are two charts at the bottom of this article that illustrate what I’m talking about here.  The first is a chart from the St Louis Federal Reserve that shows the St Louis home price index and home rental rates from 1970 to present.  The chart illustrates that rental rates increase at a very consistent rate and home prices follow along at a similar pace.  Presently, home prices have fallen behind rental rates which, based upon history, will result in home prices increasing.  Therefore, currently, in many markets it is more expensive to rent than it is to buy but the savings of homeownership will probably shrink, and perhaps disappear, as home prices rise going forward, particularly if home price appreciation begins outpacing rental rate appreciation, which is likely the happen.  The next chart, the Housing Affordability Index from the St Louis Federal Reserve, also illustrates how affordable home ownership is presently.  Granted, not as affordable as when home prices hit bottom in 2012, the result of the housing bubble burst in 2008, but illustrating that home ownership is more affordable now than at any time prior to the housing bubble burst in 2008.

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St Louis Home Price Trends By City/Municipality 
2016 SMART Guide For Home Buyers
2016 SMART Guide For Home Sellers

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Mortgage Originations In 2nd Quarter Rise…4th Consecutive Rise Since 14 Year Low

The Federal Reserve Bank of New York just released it’s Quarterly Report on Household Debt and Credit for the 2nd quarter of 2015 in which some encouraging facts were revealed with regard to the home mortgage market, including:

  • New home loan originations during the quarter increased to $466 billion…this marks the fourth consecutive quarterly increase since originations hit a 14-year low a year ago
  • As the chart below illustrates, roughly 95,000 individuals had a new foreclosure add to their credit report during the quarter, marking the lowest number of new foreclosures since the data was first tracked 16 years ago.
  • Mortgage delinquencies improved with the share of seriously delinquent mortgages (90+ days) dropping to 2.5% from 3.0% during the prior quarter.
  • Mortgage delinquencies improved again, with the share of mortgage balances 90 or more days delinquent decreasing slightly;
  • The median credit score for borrowers obtaining a home mortgage during the 2nd quarter, as the chart below shows, rose to above 750, while the bottom 10th percentile of borrowers, also known as “sub-prime”, rose to 650.  As the chart illustrates, back in 2000 the median was around 700 and the lowest percentile was barely above the 550 mark.

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St Louis Home Sales Are Up But Amount of Increase Varies Widely By Area

Further proof of just how “local” real estate is and how important it is for home buyers and sellers to have accurate, targeted, local data is the fact that today the St Louis Business Journal reported “home sales increased 17.9 percent year to date in the St. Louis metropolitan area, more than twice the national rate of 8.4 percent”.  While I’m not saying their reporting is inaccurate, as they were quoting data from the St Louis Federal Reserve, the problem is the data is based upon sales for the whole St Louis MSA which is comprised of 17 counties with 8 of them in Illinois as well as the fact the data does not come from what is probably the best and most accurate source of data, the REALTOR MLS.

However, many home buyers and sellers just see or hear the headlines from the media which could negatively impact you if you think the market you are buying or selling in is in fact stronger or weaker than you think.  For example, based upon the headline, if you were looking to buy a home in the City of St Louis you would probably find some comfort knowing you are buying somewhere where the housing market is so hot home sales have increased more than double the national average year to date from last year.  The reality is though, while home sales in the city of St Louis are doing better so far this year than last year, as the table below shows, this year there have been 1,385 homes sold, an increase of 7.7% from last year when there were 1,286 homes sold during the same period.  Don’t get me wrong, an increase of 7.7% is good however, it is actually below the national average of 8.4% and certainly not double the national average as the headlines and MSA data may make you think.

So what’s the answer?  Call me and I’ll make sure you get the accurate information you need for your particular situation and can also connect you with one of our professional, hand-picked agents that can help you put the data and information to work in your best interest whether buying or selling.  Seriously, don’t you think you deserve this for what may be the biggest financial transaction you make?  Call or text me at 314.332.1012 or email me at Dennis@STLRE.com.

Oh yeah, and check out all the tables below for accurate sales data for the REAL St Louis market as well as the individual counties.

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New Home Construction In Midwest Slips In May After Spike in April

New Home Construction in the Midwest declined to a seasonally adjusted annual rate of return of 104,000 homes in May after hitting a rate of 123,000 homes in April.  April’s increase in activity brought the rate of new home construction to 23% above a year ago, but in May the rate fell to a point 1% below the same time last year, according to newly released date from the U.S. Commerce Department and U.S. Census Bureau.

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Building Permits Issued In St Louis MSA for Single-Family Homes

St Louis MSA New Home Building Permits Chart

Source: Federal Reserve – St Louis

New Home Construction In Midwest Surges in April

New Home Construction in the Midwest really heated up during the month of may with construction beginning during the month on new single-family homes a the annual rate of 126,000 homes, an increase of 43.2% from March and an increase of 15.6% from April 2014, according to newly released date from the U.S. Commerce Department and U.S. Census Bureau.  During the month of April, new homes were completed at the annual rate of 128,000 homes, an increase of 50.6% from March and an increase of 28.0% from a year ago.  Building permits issued for new homes did not keep pace with new construction and were issued at the annual rate of 100,000 homes which is still an increase of 1% from the month before and an increase of 5.3% from April 2014.

National Association of Home Builders Chairman, Tom Woods, a builder from right here in Missouri (Blue Springs) said “Our builders tell us that consumers are slowly returning to the market” and added, “This month’s report shows release of pent-up demand and evidence of a sustainable housing recovery.”

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New Home Construction In Midwest Shows Mixed Results in March

New Home Construction in the Midwest showed mixed results in March with a small increase from a year ago in the number of building permits issued but a decline in the number of new homes construction began on or was completed on, according to data released this week by the U.S. Commerce Department and U.S. Census Bureau.

New home construction activity in the midwest region of the U.S. in March (all figures shown are seasonally adjusted, annual rates)

New Home Construction In St Louis Losing Steam

New home construction in St Louis has begun 2015 with a slower start than one might expect given the spring-like weather St Louis experienced during much of January and the flurry of activity we have seen thus far this year from home buyers.  Permits issued in January for new homes in the St Louis Metro Area were down 7.85 percent from a year ago, according to data from the Federal Reserve Bank of St Louis.  As the chart below illustrates, for the bulk of last year, the number of permits issued during the month was down from a year ago.

Percentage Change From Year Ago In Building Permits Issued In St Louis MSA for Single-Family Homes

St Louis New Home Building Permits Change From Year ago

Source: Federal Reserve – St Louis

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St. Louis Borrowers in a Rush for Low Mortgage Interest Rates and Fees

tyler-frank

Tyler Frank,
Paramount Mortgage
NMLS ID 942420

Nationwide 30-year fixed mortgage rates have climbed to their highest level of the last five weeks according to last week’s rate survey conducted by Bankrate.com.

This has spurred concern from many home refinancers and potential homebuyers who “worry the low rates won’t last much longer as they try to beat the clock on rising mortgage fees and policy changes on low down payment loans,” reports Polyana da Costa, Bankrate.com.


Continue reading “St. Louis Borrowers in a Rush for Low Mortgage Interest Rates and Fees

St. Louis New Home Construction Activity Continues to Increase; Fed Chairman Bernanke Warns of Moderate Reovery Though

dennis-norman-st-louis-realtor-This morning, the Commerce Department released its new home construction report showing that, on a national basis, all aspects of new home construction, permits, starts and completions, are up double digits in October 2012 from the year before.  The Home Builders Association’s new home report shows similar results in St. Louis as well with permits in St. Louis county up almost 24 percent in October from a year before, a 44 percent increase in St. Charles County and modest decreases in Jefferson County and Franklin County. Continue reading “St. Louis New Home Construction Activity Continues to Increase; Fed Chairman Bernanke Warns of Moderate Reovery Though

How to apply for independent foreclosure review

dennis-norman-st-louis-realtor-UPDATE – August 2, 2012 – The deadline for requesting a review of your mortgage foreclosure under the federal banking agencies’ Independent Foreclosure Review has been extended until December 31, 2012

If you feel you were a victim of an improper foreclosure process in 2009 or 2010 by one of the companies below, you may apply for an independent foreclosure review and receive compensation if the independent review finds evidence of direct financial injury to you due to servicer error. Time is running out however as the deadline to apply is July 31, 2012. To make it easier to understand the process, the fed’s have produced a video on how to apply which I have included below. Continue reading “How to apply for independent foreclosure review

Fed Reserve Governor Duke on the "Prescriptions for Housing Recovery"

dennis-norman-st-louis-realtor-housing-boom-and-bustBefore you go getting too excited over my headline, I should point out that, even though Fed Reserve Board Governor Duke’s presentation today at the National Association of REALTORS mid-year meeting in Washington D.C. was titled “Prescriptions for Housing Recovery“, Governor Duke opened her remarks with “I wish I had such a prescription”. She went on to say that it is difficult to think of a single thing that, by itself will generate a sustainable recovery in housing. She did say, however, that she saw some policies that will help reduce the shadow inventory of houses in the foreclosure pipeline as well as improve the availability of financing to potential home buyers.
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Bank of America, J.P. MOrgan Chase, Wells Fargo, Citigroup and Ally Financial reach $25 Billion Agreement with Fed & State Government over Foreclosure Abuses

The Justice Department, the Department of Housing and Urban Development (HUD) and 49 state attorneys general announced today the filing of their landmark $25 billion agreement with the nation’s five largest mortgage servicers to address mortgage loan servicing and foreclosure abuses. Continue reading “Bank of America, J.P. MOrgan Chase, Wells Fargo, Citigroup and Ally Financial reach $25 Billion Agreement with Fed & State Government over Foreclosure Abuses

Victims of bad foreclosure practices get more time to apply for review and possible compensation

dennis-norman-st-louis-realtor-foreclosures-Last November I wrote about how victims of wrongful foreclosure could apply for an independent review of their file and possibly receive compensation under a new presented by acting Comptroller of the Currency, John Walsh. The deadline to apply for this was to be April 30, 2012, however, today, the Office of the Comptroller of the Currency announced they have extended the deadline to apply three months until July 31, 2012. Continue reading “Victims of bad foreclosure practices get more time to apply for review and possible compensation

Housing is cheap and can be an extremely attractive investment opportunity!

Dennis Norman, St Louis REALTOR - Investing in Real EstateBetween interest rates falling to record lows and home prices falling back to levels from 8 years ago, the housing market is starting to look like a very attractive investment opportunity.

One of my favorite companies that produce a home price index and monitor the market is RadarLogic and their RPX Composite Price Index. They published some data to illustrate just how attractive housing has become as an investment (granted, they are trying to stir up interest in their new RPX Futures you can invest in, but the data I think supports investing in residential real estate as well.)
Continue reading “Housing is cheap and can be an extremely attractive investment opportunity!

REALTORS offer suggestions to the Fed on how to deal with the REO problem

Dennis Norman, St Louis REALTORNational Association of REALTORS® (NAR) President, Ron Phipps, wrote a letter to Shaun Donovan, Secretary of the Department of Housing and Urban Development, Timothy Geithner, Secretary of the Treasury Department and Edward DeMarco, Acting Director of the Federal Housing Finance Agency with suggestions on how to improve the Real Estate Owned (REO) asset disposition programs for Fannie Mae, Freddie Mac and FHA. NAR, like many other housing related associations and organizations, submitted letters in response to the government’s request for information on how to deal with the REO problem. Continue reading “REALTORS offer suggestions to the Fed on how to deal with the REO problem

Converting REO’s to rentals could help housing recovery according to Fed Official

St. Louis REALTOR, Dennis NormanFederal Reserve Governor Elizabeth A. Duke, while speaking at the Federal Reserve Board Policy Forum last week, discussed the effect on the housing market that properties acquired by banks and lenders through foreclosure (REO’s) and suggested that if some of this inventory was converted to rental property by the lenders, this may have a positive effect on the housing market. Continue reading “Converting REO’s to rentals could help housing recovery according to Fed Official

Feds Take Action Against Banks for Misconduct and Negligence Related to Mortgage Loan Servicing and Foreclosure Practices

Dennis Norman St LouisOver the past year or so there have been dozens, if not hundreds, of stories questioning the manner in which lenders were handling the servicing of their loans, particularly those of underwater borrowers, as well as the foreclosure practices of many including “robo-signing” of foreclosure affidavits. Next came the lawsuits and now, this week, the Federal Reserve Board announced formal enforcement actions requiring 10 banking organizations to address “a pattern of misconduct and negligence related to deficient practices in residential mortgage loan servicing and foreclosure processing.” Continue reading “Feds Take Action Against Banks for Misconduct and Negligence Related to Mortgage Loan Servicing and Foreclosure Practices

Home prices expected to continue to suffer as a result of foreclosures

Much has been written (including by me) about the negative impact foreclosures and other distress sales have on home prices so this is no new issue.  In fact, most readers have probably seen (or felt) the impact of this in their own neighborhood.

The charts below which show the percentage of mortgages that were 90 days or more past due and in foreclosure for 2007 through 2010 illustrate well just how ugly this issue is.  In the lower left hand corner of each chart is depicted the national house-price index through the period and it is easy to see that as the foreclosure activity grew, home prices declined.  Continue reading “Home prices expected to continue to suffer as a result of foreclosures

‘Shoddy’ mortage servicing practices prolonging housing market trouble

This past Friday Federal Reserve Board Governor Sarah Bloom Raskin spoke at the 2011 Midwinter Housing Finance Conference about the powerful impact the housing and mortgage markets have had on the nation’s economy recovery.

Governor Raskin began by point out that, “speaking strictly in an economic sense, the recession that emerged in 2008 is over.”  She then followed by saying “I know that the millions of Americans still looking for work, living in cars or motels, or trying to keep their businesses out of bankruptcy would beg to disagree.”  Gov Raskin went on to state that our economy is in fact growing, but the pace of recovery is “agonizingly slow” and not keeping pace with recovery in prior recessions. Continue reading “‘Shoddy’ mortage servicing practices prolonging housing market trouble