Mortgage Rates to Remain Low

As long as everything stays rosy, we’ll be fine……

The housing market has been looking slightly better over the last few month and Freddie Mac July economic report reflects that fact.  They also maintain a fairly rosy picture of the economy as a whole.

They note that the 30-year fixed-rate mortgages (FRM) dipped below 4.0 percent at the end of May and has remained there “amid concerns over trade disputes, a possible economic slowdown, and market anticipation of a Federal Reserve interest rate cut.”  This has caused a spike in mortgage applications for both purchase and refinancing and they predict that low rates, along with a thriving labor market, will help sustain the housing market, not just short term, but for at least the next year and a half.

They have, in fact, revised down their quarterly forecasts for mortgage rates over that period, forecasting an annual rate for the 30-year fixed-rate mortgage of 4.1 percent this year and an even lower 4.0 percent in 2020.

As to other rates, while not predicting a cut in the Federal Funds rate after today’s Federal Open Market Committee (FOMC) meeting, they still expect “cuts” in the second half of the year and project an effective rate of 2.3 percent in the third and fourth quarters with an average of 2.4 percent for the year, unchanged from their earlier forecast. The average next year will be 2.3 percent in 2020 and they see no further FOMC cuts.

The lower rates will turn investor interest towards more lucrative stocks and away from government bonds they say, and forecast that the 10-year Treasury rate will decline to 2.3 percent in 2019 and stay at the same level in 2020. Also, maintaining the spread between government bond yields, they see the 1-year Treasury rate to be 2.2 percent in both 2019 and 2020.

They say the strong homebuilder confidence and lower mortgage rates will lead to a recovery of housing starts and sales from their 2018 slump and that housing starts will end this year at 1.26 million and increase to 1.34 million in 2020.  Home sales will be 6.0 million in 2019 due to the continuing shortage of inventory but will return to 2017 levels of 6.12 million next year.

The recent home price reports have sent mixed signals, but the report’s authors expect home prices to rise by 3.4 percent this year.  They have revised their expectations for next year down to a 2.6 percent appreciation rate.

http://www.mortgagenewsdaily.com/07312019_freddie_mac_forecast.asp

More Funding

Here’s the official announcement, but the WSJ said that bringing in Dragoneer probably means that the IPO is getting close:

On Tuesday, Compass announced its $370 million Series G round of fundraising at a valuation of $6.4 billion —  a 45% increase in valuation in 10 months. This brings its total capital raised to more than $1.5 billion.

New and returning investors cited Compass’ consistent growth, proven scale across the largest real estate markets, and proprietary technology as the key reasons why they invested. They view Compass as uniquely positioned to build a real estate platform that makes the search and selling experience intelligent and seamless to deliver superior results for you, the Compass client.

This round of financing positions Compass to:

  • Fuel our technology investments and advancements, including hiring additional Product & Engineering talent and accelerate software development, such as our upcoming launch of a revamped consumer search experience, which will help me get the best offer for your home.

  • Further invest in programs like Compass Concierge, which empowers home sellers to sell their home faster and for more money by fronting the cost of home improvement services like staging, painting and more, which will help sell your home faster and for a better price.

This investment brings us steps closer to realizing our mission to help everyone find their place in the world, and I am excited for this next chapter!

FAQs

Q: Why did Compass decide to raise more capital?

A: Funding from investors makes it possible to invest in our proprietary technology to create a next generation platform for home transactions and ownership, and also to support other programs such as Compass Concierge, which help us empower our agents and grow the company.

As with past rounds, the decision to fundraise was not made due to lack of capital. We will use this funding to drive investment in industry innovations that attract both sellers and buyers to the Compass platform, delivering superior results that, in turn, empower our agents to grow their business.

Q: Who are the investors?

A: Participating investors include a select group of longstanding partners and new investors including Canada Pension Plan Investment Board (CPPIB), Dragoneer Investment Group, Softbank Vision Fund and Qatar Investment Authority (QIA), among others.

Q: Why did investors decide to invest?

A: New and returning investors cited Compass’s consistent growth, proven scale across the largest real estate markets, and proprietary technology as key drivers of their investment. They view Compass as uniquely positioned to build a modern real estate platform making the search and selling experience intelligent and seamless to deliver superior results for buyers, sellers and their agents.

San Diego Case-Shiller Index, May

We had a solid 1% increase in our local index M-o-M, and it was about the same year-over-year:

San Diego Non-Seasonally-Adjusted CSI changes:

Observation Month
SD CSI
M-o-M chg
Y-o-Y chg
January ’18
248.16
+0.8%
+7.3%
February
250.91
+1.1%
+7.5%
March
253.41
+1.0%
+7.6%
April
255.63
+0.9%
+7.7%
May
257.07
+0.6%
+7.3%
Jun
258.44
+0.6%
+6.9%
Jul
258.49
0.0%
+6.2%
Aug
257.32
-0.5%
+4.7%
Sept
256.13
-0.4%
+3.9%
Oct
255.26
-0.1%
+3.7%
Nov
253.37
-0.6%
+3.3%
Dec
251.68
-0.7%
+2.3%
January ’19
251.30
-0.2%
+1.3%
Feb
253.69
+0.9%
+1.1%
Mar
256.44
+1.1%
+1.2%
Apr
257.63
+0.5%
+0.8%
May
260.17
+1.0%
+1.2%

From cnbc on today’s Pending-Home-Sales increase of 2.8% nationally:

“If mortgage rates remain near recent lows, we could see prices pick back up as a result of improved affordability as well as the possibility of more limited inventory available,” said Danielle Hale, chief economist for Realtor.com.

The supply of homes for sale had been rising for much of this year but flattened in June. Some are predicting inventory will be lower again this fall. That is causing more competition in the market.

“Homes are selling at a breakneck pace, in less than a month, on average, for existing homes and three months for newly constructed homes,” said Yun. “Homeowners’ equity in real estate has doubled over the past six years to now nearly $16 trillion. But the number of potential buyers exceeds the number of homes available. We need to see sizable growth in inventory, particularly of entry-level homes, to assure wider access to homeownership.”

Regionally, the Realtors’ pending home sales index rose 2.7% in the Northeast month-to-month and was 0.9% higher than a year ago. In the Midwest, the index grew 3.3% monthly and 1.7% annually. In the South, the index increased 1.3% monthly and 1.4% annually. In the West, pending sales jumped 5.4% monthly and were 2.5% higher than a year ago.

Sober-Living Homes

They should identify the locations so homebuyers are aware:

Sober living homes have become a contentious issue with residents in the neighborhoods where they have developed. As a result, the City Council formally approved an ad hoc committee to address them during its July 23 meeting.

Thousands of sober living homes have popped up throughout the state, mostly in Southern California from Los Angeles to Orange and San Diego counties.

Serving on the committee will be council members Keith Blackburn and Barbara Hamilton.

“It would be to address the issue of sober living homes, to engage community stakeholders, listen to and discuss their concerns and recommendations regarding sober living homes and to recommend potential state and local regulatory and legislative strategies for the City Council to pursue,” said Jason Haber, assistant to the city manager.

(more…)

La Costa Glens – PEND

3022 Segovia Way, Carlsbad 3br/2ba, 1,542sf one-story on a 13,033sf lot.

$839,000

Dreaming about the perfect backyard? Check out this extra-large and flat 13,033sf lot with plenty of privacy too! It backs to the park, and is easy walking distance to La Costa Heights Elementary School (rated a 10 at greatschools) in the Encinitas school district. This one-story house is light and bright with high ceilings (no cottage cheese) with new stove/oven and newer flooring, water heater, and furnace. Plus there’s no HOA or Mello-Roos either. City encourages a 640sf granny flat too – easy to add!

COMPS: Model match in identical condition with an illegal bedroom addition and BACKED TO RSF RD closed for $808,000 last August (3117 Quebrada Ct). Another in original condition with old pool closed for $850,000 in July, 2019 (7732 Anillo Way). A smaller single-story in mostly original condition closed for $851,000 in April, 2019 (7967 Represa Circle). And 3103 Cadencia just closed for $1,075,000.

If my listing was on a regular-sized lot, it would be easily valued at $800,000 today – how much premium for the double-sized lot??

Inventory Watch

I guess I might have jinxed it last week when I said, “How about a late-summer surge!”

This week we had the lowest amount of NSDCC new pendings (47) since February, in spite of mortgage rates being about 3/4% lower than last year.  Hopefully the rest of summer doesn’t just fade away:

Lower-end pricing has been on a runaway train lately.  Last year at this time, the houses under $1,000,000 had list prices that averaged $433/sf.  Today it’s $493/sf, which is a 14% increase!

(more…)

Pin It on Pinterest