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  • As a seller, you will be most concerned aboutshort term price where home values are headed over the next six months. As either a first-time or repeat buyer, you must not be concerned only about price but also about thelong term costof the home.Let us explain.

    There are many factors that influence the cost of a home. Two of the major ones are the homes appreciation over time, and the interest rate at which a buyer can borrow the funds necessary to purchase their home. The rate at which these two factors can change is often referred to asThe Cost of Waiting.

    What will happen over the next 12 months?

    According toCoreLogics latestHome Price Index, prices are expected to rise by 5.5% by this time next year.

    Additionally,Freddie Macsmost recentEconomic Commentary & Projections Tablepredicts that the 30-year fixed mortgage rate will appreciate to 4.5% in that same time.

    What Does This Mean to a Buyer?

    Here is a simple demonstration of what impact these projected changes would have on the mortgage payment of a home selling for approximately $250,000 today:

  • Credit Closes In on Pre-Crisis Benchmark, with Midwest Most Improved

    Americans credit profiles have recovered extensively since the recession, with the average credit score now closing in on a pre-crisis benchmark.

    According to Experians recently releasedState of Creditreport, the average credit score in the U.S. is 673, six points shy of 679, the average in 2007. The tapering gap represents healthier conditions for housing, which is experiencing pent-up demand as creditworthiness continues to come up short of lender standards.

    We are seeing the positive effects of economic recovery, with the rise in income and low unemployment reflected in how Americans are managing their credit, said Michele Raneri, vice president of Analytics and New Business Development at Experian in a statement on the report. All credit indicators suggest consumers are not as credit stressed. Credit card balances and average debt are up, while utilization rates remained consistent at 30 percent.

    The Midwest showed the strongest credit improvement, according to the reportthe metropolitan area with the highest average credit score in the nation was Mankato, Minn., at 708. Metro areas in Minnesota took the top three spots in the reports ranking: Rochester in second, also at 708, and Minneapolis in third at 707. Completing the top 10 were Green Bay, Wis. (704), Wausau, Wis. (704), Duluth, Minn. (703), Sioux Falls, S.D. (703), La Crosse, Wis. (703), Fargo, N.D. (703), and Madison, Wis. (702).

    The Midwest has become a hotbed of housing activity, as millennials continue to migrate from coastal centers inward in search of a more affordable lifestylein fact, the Midwest was recently highlighted inrealtor.coms forecast as a market to watch in 2017.

    Swaths of the South and metropolitan areas in California comprised the bottom of the reports ranking, with Greenwood, Miss. the lowest at 622, though posting an improvement from 612 in 2015. The remaining bottom 10: Albany, Ga. (624), Harlingen, Texas (631), Riverside, Calif. (632), Laredo, Texas (635), Monroe, La. (639), Alexandria, La. (639), Bakersfield, Calif. (639), Corpus Christi, Texas (639), and Shreveport, La. (640).

    When comparing the cities with the highest credit scores and those with the lowest, we definitely see similar trends, said Raneri. Cities with higher credit scores have lower utilization rates, late payments and balances, while those with lower scores have just the opposite.

    Credit conditions overall, according to the report, are fitter than they were just one year agoyet another sign of a strengthening economy.


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  • For the Week Ending January 27, 2017

    Equities are rallying. The Dow Jones got the most press this week when it hit a new high of 20,000. The S&P and the Nasdaq reached new highs as well.The Fed will meet next week, although it's not likely we'll see a policy rate increase right now. The Fed has said it will probably raise rates 3 times this year.However, mortgage rates are influenced by bond market movement and are not controlled directly by the Fed. Current economic growth could pressure mortgage rates higher.After 3 straight months of gains, new home sales were down slightly in December. Demand remained strong despite recent slight rate increases.Existing home sales were also down slightly, with the decline being blamed on short inventory. Supply of previously owned homes was at a 17-year low in December.The median price for new homes rose to $322,500, a 7% increase from December 2015. Home sales prices are expected to continue to increase in 2017.

    A guy walks into a bar and takes a seat. Before he can order a beer, the bowl of pretzels in front of him says, "Hey, you're a handsome fellow."

    The man tries to ignore the bowl of pretzels and orders a fine pilsner beer.

    The bowl of pretzels then says, "Ooooh, a pilsner, great choice. You're a smart man."

    Starting to freak out, the guy says to the bartender, "Hey, what the heck? This bowl of pretzels keeps saying nice things to me!"

    The bartender replies, "Don't worry about it. The pretzels are complimentary."

    Rate movements and volatility are based on published, aggregate national averages and measured from the previous to the most recent midweek daily reporting period. These rate trends candiffer from our own and are subject to change at any time.

    Update provided by:

    Joe Brockman

    Branch Manager | NMLS #353454 academymortgage.com/joebrockman

  • A Decent Year for 2016 but Outlook for 2017

    Is Murky California home sales slowed down in December after experiencing strong year-over-year gains in October and November. Sales of existing singlefamily homes in the final month of 2016 dropped 7 percent from November, and declined 0.6 percent from the same month of 2015. Despite the declines, home sales in December were solid and on par with the two-year average sales-pace of 412,000 maintained since 2015. The rising trend in interest rates at the end of 2016 may have carried some sales forward, causing a stronger than normal December for the second year in a row, following an unusually strong sales-pace of December 2015 trigged by the effects of the Know Before You Owe mortgage disclosure rules (TRID).

    Tight inventory remained an issue in California, as the statewide unsold inventory index dropped in December to 2.6 months, the lowest level since May 2013. Despite a decline in closed sales in December, the index worsened as the number of active listings dropped 8.5 percent from December 2015.

    Scant housing inventory exerted upward pressure on home prices and the statewide median price climbed 3.9 percent in December from the previous year. The increase, however, was the smallest since February 2016. The modest increase was attributed partly to the change in the mix of sales between December 2016 and December 2015, as sales were much stronger in the high-end market last December with many non-conventional loans delayed closing due to TRID. This is also a primary reason for the more significant decline in sales in higher-priced regions in December than in other more affordable areas.

    For the year 2016, California managed to edge out a marginal gain of 1.7 percent in existing home sales from last year to hit 416,250, as the state housing market wrapped up the year with a very strong quarter. In fact, the fourth quarter was the strongest we have seen since the last quarter of 2012 when we had our last presidential election. The statewide median price also increased 5.4 percent from 2015 to reach $502,250, and it was the first time since 2007 that the median price surpassed the $500,000 benchmark.

    While the housing market closed out 2016 with a decent performance, it is by no means an indication that the environment will be easy in the upcoming year. As we move forward with a new president and a new administration in 2017, we are chartering into a territory with many uncertainties in the policy arena that will present challenges to the housing market. The future of Fannie and Freddie, the impact of tax reform, the changes to financial regulations such as the Dodd-Frank Act, and the risks of global trade wars are a few of the unknowns that the market will likely encounter in 2017 and beyond. Adding into the mix a rising trend in interest rates, a housing supply shortage, and a persistent affordability crunch, the 2017 housing market outlook will be the most unpredictable one in recent history.