by rtdosen | Sep 8, 2014 | Ryan Dosen Real Estate Articles
Freddie Mac’s Market Indicators Point Toward Continued Housing Improvement By Ryan Dosen Freddie Mac’s second quarter Multi-Indicator Market Index (MiMi) was released in late August. The report showed that the nation’s housing markets “continued to plod along in the second quarter of 2014, while most U.S. housing markets remain generally weak….” However, there were several signs that Pennsylvania’s real estate market is set to continue its climb from the early year doldrums. About Freddie Mac and the MiMi According to Wikipedia, the Federal Home Loan Mortgage Corporation, commonly known as “Freddie Mac”, was created in 1970 “to expand the secondary market for mortgages in the U.S. Along with other (government-sponsored enterprises), Freddie Mac buys mortgages on the secondary market, pools them, and sells them as a mortgage-backed security to investors on the open market.” As one of the most important cogs turning the wheels of our real estate market, Freddie Mac has to keep close tabs on housing. That’s where MiMi comes in. Freddie Mac states that its monthly MiMi “measures the stability of the nation’s housing market, as well as the housing markets of all 50 states … and the top 50 metro markets. MiMi combines proprietary Freddie Mac data with current local market data to assess where each single-family housing market is relative to its own long-term stable range by looking at home purchase applications, payment-to-income ratios (changes in home purchasing power based on house prices, mortgage rates and household income), proportion of on-time mortgage payments in each market, and the local employment picture.” MiMi composite scores can range from 0 to 200. Scores of...
by rtdosen | Aug 29, 2014 | Ryan Dosen Real Estate Articles
Total Cost Analysis and the Dreaded ARM By Ryan Dosen The adjustable rate mortgage (ARM) has taken its lumps over the past decade. Many of them well-deserved. However, there may be reason to consider taking another look at the ARM. The numbers behind the ARM may make more sense for your real estate and financial goals than you might anticipate. History of the ARM The ARM earned its less-than-sparkling reputation back in the devastating real estate collapse of the 2000s. During the real estate bubble, tons of people were saddling up for the ride with adjustable rate mortgages and negative amortization mortgages (mortgages that allowed you to avoid paying full principal and interest payments in the beginning by simply tacking the unpaid amounts on to the end of the mortgage—increasing your balance over time). The goal was to pay as little as possible out of your pocket in the beginning stages of loan payback. You weren’t going to hold on to the mortgage for 30 years. You were just taking advantage of a hot market. You’d pay 4 percent interest for a couple of years, while allowing the property values to increase by 20 percent. You’d sell relatively quickly, take a fast and easy profit, and be long gone before the rates would ever change. Or so you thought…. The low initial payments also allowed you to qualify for more house and bigger loans than normal. After all, your loan qualifications had been based upon the initial payments, not the payments you could be forced to make a few years down the road after the rates were recalculated. Of...
by rtdosen | Aug 26, 2014 | Ryan Dosen Real Estate Articles
Builder Confidence Climbs After Best Spring in Years By Ryan Dosen The National Association of Realtors (NAR) reports that this year’s spring real estate market was the strongest one we’ve seen in three years. Confident homebuilders are scrambling to put enough shovels in the ground to meet increased demand. Existing home sales continue to rise. The signs and data are good for the real estate market and there’s good reason to believe that this train is building momentum. Healthiest Spring Market in Three Years Realtor.com reports that the “July housing data shows that price appreciation and inventory increases during the peak home-buying season helped the market to post the largest spring gains in three years.” Jonathan Smoke, chief economist for Realtor.com adds that “we’re ending the traditional season with high buyer and seller confidence demonstrated by price appreciation, increases in inventory, and quick home sales.” Specifically, NAR reports that home “inventories rose 2.3 percent year-over-year, as the median list price posted a 7.5 percent increase year-over-year.” According to Smoke, “this is the first time since the beginning of the recovery that we expect to see positive momentum throughout the second half of the year…. (Almost all) metrics point to fundamental market health and a build-up of momentum.” Homebuilders Confident and Busy The U.S. Commerce Department reports that construction of new homes reached its highest level since November 2013, rising 15.7 percent in July to a seasonally-adjusted annual pace of 1.09 million units. Kevin Kelly, chairman of the National Association of Home Builders (NAHB) observes that “a return to production levels over 1 million confirms that...
by rtdosen | Aug 21, 2014 | Ryan Dosen Real Estate Articles
FICO Gets Friendly with Medical Delinquencies By Ryan Dosen Your Fair Isaac Corporation (FICO) score, the all-important and somewhat mysterious numerical representation of your supposed credit risk to lenders, may be about to change for the better. FICO recently announced that it is adjusting some of the criteria it uses for assessing a person’s credit related to existing, but paid accounts, as well as outstanding medical bills. The National Association of Realtors (NAR) says that the “changes come after a recent Consumer Financial Protection Bureau study, which found that both paid and unpaid medical debts were unfairly penalizing consumers’ credit ratings.” According to The Wall Street Journal, experts say that these latest score changes “could result in some borrowers receiving credit scores that are as much as 100 points higher.” FICO Score FICO says that its score “is calculated from several different pieces of credit data in your credit report.” This data is grouped into five weighted categories: Payment History (weighted as most important; 35 percent of your FICO score) Amounts Owed (30 percent) Length of Credit History (15 percent) New Credit (10 percent) Types of Credit Used (10 percent) FICO Score: Payment History When making a lending decision, perhaps the single most important piece of information a lender can have is whether you have paid past credit accounts on time. Thus, payment history is the most heavily weighted factor in your FICO score. FICO Score: Amounts Owed FICO says that “having credit accounts and owing money on them does not necessarily mean you are a high-risk borrower with a low FICO Score. However, when...
by rtdosen | Aug 18, 2014 | Ryan Dosen Real Estate Articles
Millennials on the Move By Ryan Dosen According to the 2014 National Association of Realtors’ Home Buyer and Seller Generational Trends report, Millennials (those born from 1980 to 1999) recently passed Baby Boomers (those born from 1946 to 1964) as the largest of this country’s named generations. Despite facing several headwinds, this largest generation is expected to drive demand for an improved real estate market for quite some time. About Millennials The Pew Research Center recently released its “Millennials in Adulthood” report, discussing trends for a generation that is “relatively unattached to organized politics and religion, linked by social media, burdened by debt, distrustful of people, in no rush to marry—and optimistic about the future.” According to Pew, “Millennials are also the first in the modern era to have higher levels of student loan debt, poverty and unemployment, and lower levels of wealth and personal income than their two immediate predecessor generations (Gen Xers and Boomers) had at the same stage of their life cycles.” These difficulties, coupled with having to face the Great Recession (2007-2009) at a time when many Millennials were looking to begin or take important early steps in their professional careers, have made it a particularly tough road for this generation. Despite Millennials’ troubles, Pew says that this group represents “the best-educated cohort of young adults in American history,” with a third of older Millennials having a four-year college degree or more. It is entirely possible that this highly-educated and optimistic generation has simply needed more time to establish themselves financially before they marry and take the next steps for home ownership. Median...
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