Maine’s real estate continues to increase in value, despite a decline in sales last month. Maine Listings reported an impressive 12.50 percent jump in home prices, bringing the statewide median sales price (MSP) to $180,000 during the month of February.
Weather certainly affected buyers last month, and sales eased 12.91 percent. “The February 2017 data was impacted by a 10-day period of record-breaking snow and a comparison February 2016 (Leap Year with an additional day),” explains Greg Gosselin, President of the Maine Association of REALTORS. “Statistics indicate continuing strong real estate sales and value trends throughout Maine.
REALTORS report that pre-qualified buyers are actively searching now to take advantage of the long-term affordability and tax benefits that home ownership provides.” According to the National Association of Realtors, sales of single-family homes nationwide rose 5.8 percent over the past year. The national MSP of $229,900 represents a 7.6 percent jump. Regionally, single-family existing home sales in the Northeastern US increased 1.5 percent while values were up 4.1 percent to $250,200.
The Federal Reserve voted on Wednesday to again raise the key interest rate one-quarter percentage point, the first of three hikes anticipated for 2017. The rate was increased one-quarter percentage point just three months ago, in December 2016.
“In view of realized and expected labor market conditions and inflation, the [Federal Open Market] Committee decided to raise the target range for the federal funds rate to 3/4 to 1 percent,” according to a statement by the Fed. “The stance of monetary policy remains accommodative, thereby supporting some further strengthening in labor market conditions and a sustained return to 2 percent inflation.”
The probable decision, which followed encouraging employment figures in February, marks a turning point in policy. The Fed raised the rate only twice in the past decade; Wednesday’s decision quickens the pace, signaling the potential for more aggressive action as the year unfolds.
Rising rates have been top of mind for members of the housing industry, who fear diminishing affordability—a concern, still, that could be overblown. A recent survey by Zillow Group Mortgages revealed the majority of homebuyers would see their purchase plans through if rising rates resulted in a $100 increase to their mortgage payments. Many would continue with their plans even if their payment were to increase by $200.
Mortgage rates are indirectly impacted by the movement of the key rate. The 30-year fixed mortgage rate jumped to a year-high last week.
While this may have a downward effect on buyer demand, home prices are still at historic lows and interest rates remain relatively low. These two factors make for robust activity in the 2017 real estate market.
Is now a good time for FHA to reduce hurdles to home ownership with a lower mortgage insurance premium?
The National Association of Realtors (NAR) says yes, but the Trump administration and some members of Congress aren’t so sure. On Inauguration Day, the U.S. Department of Housing and Urban Development suspended a planned reduction in the FHA premium saying in a letter to mortgage lenders that “more analysis and research are deemed necessary.”
The quarter-point reduction had been announced in the waning days of the Obama administration and was scheduled to go into effect on Jan. 27, 2017. It would have been the second premium reduction in two years, after five successive increases in the MIP, starting in 2010, put in place to shore up FHA’s flagging reserve fund.
During the housing crisis, higher-than-normal defaults drove the agency’s reserve fund below the congressionally mandated 2 percent. the agency must have excess reserves of 2 percent in its mortgage insurance fund to cover short-term losses in its portfolio. That’s over and above the 30 years of reserves FHA maintains on all the insurance in force in the fund. The requirement is much higher than the reserve requirement for private lenders. By January 2015, when FHA reduced the MIP by more than 35 percent, the excess reserve was back above 2 percent. It’s now above 2.3 percent.
The planned quarter-point decrease would have saved buyers an average of $500 a year, reducing costs for 750,000 to 850,000 home buyers, NAR President Bill Brown said in a Jan. 30 letter to Ben Carson, the Trump administration’s HUD secretary nominee. In the letter, Brown said suspension of the premium reduction had created uncertainty and confusion for borrowers, sellers, lenders, and underwriters.
Existing-home sales stepped out to a fast start in 2017, surpassing a recent cyclical high and increasing in January to the fastest pace in almost a decade, according to the National Association of Realtors®. All major regions except for the Midwest saw sales gains last month.. January’s sales pace is 3.8 percent higher than a year ago (5.48 million) and surpasses November 2016 (5.60 million) as the strongest since February 2007 (5.79 million).
The median existing-home price 2 for all housing types in January was $228,900, up 7.1 percent from January 2016 ($213,700). January’s price increase was the fastest since last January and marks the 59th consecutive month of year-over-year gains. Total housing inventory 3 at the end of January rose 2.4 percent but is still 7.1 percent lower than a year ago.. Unsold inventory is at a 3.6-month supply at the current sales. pace (unchanged from December 2016). Thirty-eight percent of homes sold in January were on the market for less than a month.
Lawrence Yun, NAR chief economist, says January’s sales gain signals resilience among consumers even in a rising interest rate environment. “Much of the country saw robust sales activity last month as strong hiring and improved consumer confidence at the end of last year appear to have sparked considerable interest in buying a home,” he said. “Market challenges remain, but the housing market is off to a prosperous start.”
Existing-home sales began 2017 with a bang, growing 3.3 percent and hitting a 10-year high in January, according to the National Association of REALTORS® (NAR). With the exception of the Midwest, every region saw gains, with total sales reaching 5.69 million—the fastest pace since February 2007.
“Much of the country saw robust sales activity last month as strong hiring and improved consumer confidence at the end of last year appear to have sparked considerable interest in buying a home,” says Lawrence Yun, NAR chief economist. “Market challenges remain, but the housing market is off to a prosperous start as homebuyers staved off inventory levels that are far from adequate and deteriorating affordability conditions.”
The median existing-home price also rose again in January, up 7.1 percent to $228,900 from $213,700 one year prior, according to the report. The median existing condominium and single-family home prices grew, as well: 6.2 percent to $217,400 and 7.3 percent to $230,400, respectively.
Source – Rismedia