When the Wall Street Journal or Forbes run mortgage rate stories as their lead items, those of us who keep an eye on the Newport Beach real estate market pay close attention. I frequently share what they say here. But when even the non-financial outlets like USA TODAY and the cable TV news channels give top billing to real estate market news, it’s a real attention-grabber.
That’s what happened last week. USA TODAY’s online headline focused on the 15-year fixed mortgage rate, “at a record low 2.61%.” The cable news channels talked about record low rates, too (although if you hit the ‘pause’ button long enough to read the TV graphics, you saw that the national average for 30-year loans was still a shade away from the actual record low). Never mind that; it’s still surprising that mortgage rates continue to linger at such tempting lows.
The reason is hardly a secret: the Federal Reserve is holding rates down to energize the real estate market — a key element of the overall economy. Yet, with existing home sales notching up in the first quarter at the briskest pace in four years, you would have thought that mortgage rates would have been loosened up at least somewhat. And with new home sales doing their best since 2008…
Of course, it doesn’t matter what anyone expects: the results of dipping mortgage rates is just plain good news for everyone in the Orange County real estate market: buyers and sellers alike. Those low mortgage rates act to offset the rising U.S. house price index. The result for buyers is a more valuable home without the expected increase in the monthly payment. What more of an inducement to enter the real estate market could there be?
In short, if you’re considering whether it’s time to buy (or to sell your current home and trade up without busting the household budget), last week’s national and local market signs are even clearer than they have been recently. There are definitely opportunities out there! Why not give me a call for an up-to-the-moment Newport Beach real estate market evaluation?
The Weather Channel has nothing to do with it. What’s happening up in the ski resorts, likewise. The ‘snowball effect’ being discussed in print and on TV won’t soften anytime soon (even if the groundhog was right about winter being over)..
This is an economic snowball — one that’s gathering momentum following what CNN’s Money website describes as “the best year for U.S. real estate market in five years.” Businesses that stand to benefit from growth in the Orange County housing market are watching closely.
The Wall Street Journal’s snowball report took form in last Monday’s Marketplace section, where the top headline read “Housing Recovery Opens Spigot…Makers of Products From Carpets to Air Conditioners Feel Effects of Rebound.”
It was even more heartening as a counter to last week’s government indications that the greater economy seemed to slow. The housing sector’s performance was so strong it acted as a tonic to its many associated industries: among them, many Orange County retailers.
The snowball effect was noted widely. The company that makes Carrier air conditioners said that orders rose 20%; Honeywell International reported the “first sign of life we have had in a while.”
Locally, fingers were crossed that South Orange County businesses will be swept up in the snowball. National suppliers expected that to happen. “Housing is what we see leading the economy out of the doldrums,” according to the CFO of United Technologies Corp. The WSJ reported evidence that Americans are spending more to build and refurbish their properties.
With sales of existing housing registering the largest annual jump since 2004, it should come as no surprise if Credit Suisse’s Daniel Oppenheim proves correct in predicting a 7%-8% rise in home improvement spending. He expects it to keep going for at least the next two years. That’s a pretty solid forecast, and in line with what most observers are saying.
All in all, the boost from the housing recovery is one snowball no one seems to think is likely to melt soon — regardless of what Punxsutawney Phil has to say about it.
The holiday décor is down; neighborhood kids are back in school; January’s social calendar looks amazingly clear (compared with the previous two months, anyway)… so, what now? One suggestion I might offer: put some serious thought into acting on those financial New Year’s resolutions – at least the ones dealing with your Orange County real estate plans.
Doing so would dovetail nicely with my own New Year’s prediction, one I share with many credible real estate watchers:
According to Money Magazine on CNN’s website, the housing market rebound is here. Among other sources, they site the Mortgage Bankers Association forecast that “more and more house hunters will start coming off the sidelines.” They expect total dollars going to new home loans to jump a heart-thumping 55%!
For five years, Orange County homeowners weathered the storm of the credit crisis as well as could be expected; then came marked improvement in 2012. At last count, there were approximately 1.8 million homes for sale nationwide (half the number at the market’s deepest divot).
While no one expects real estate prices to see crazy red-hot double-digit increases in 2013, it is encouraging to see the worst in the rear-view mirror. And with optimism about residential real estate now broadening into general public awareness, we seem to be looking at a fresh arena for homeowners who are finally able to consider selling again…and for buyers who are past waiting for ‘The Bottom’.
The message to prospective Orange County home buyers and sellers this January echoes the sentiment of Money magazine, which answered the question, “Why, as a prospective home seller or buyer, you need to stop sitting on your hands”!
Whether or not your own New Year’s resolutions involve Newport Beach real estate, it is a propitious time to give me a call. We can start the conversation about your real estate goals and how current 2013 market opportunities fit them!
Last week’s annual National Association of Realtors® get-together opened with a grand gathering to hear what some economics heavyweights would say about coming conditions in the country.
You could hear a pin drop through most of it – despite the huge size of the auditorium. Our Newport Beach real estate market is never in total lockstep with the national picture – but it certainly is affected by it. Economists are forced to play a guessing game, but the best are pretty good at it.
Wells Fargo’s senior economist Mark Vintner had good news and bad news. For those who have Newport Beach real estate already in their ‘owned’ portfolio, despite the downturn of recent years, he thinks they own one of the few top-notch inflation-proof investments. “Real estate and gold,” he said. He gave convincing reasons why, despite almost any curves the middle-term future may send, the value of real estate (“housing”) should grow even if the economy unexpectedly weakens.
The not-so-good news was Vintner’s suspicion that the disparity in incomes will continue to widen, partly because rising rents and tough lending conditions make it hard for first-timers to make that first home purchase (of course, that’s good news for investors who own the rentals).
Of equal interest was NAR’s Chief Economist Lawrence Yun’s rapid-fire delivery of real estate stats and forecasts. He thinks mortgage interest rates will stay at their current historic lows for a while longer, but perhaps not so long as the Federal Reserve has been indicating. Longer term, Dr. Yun expects interest rates to rise gradually, but hold at the historically normal 5%-6% range. There were visible signs of relief as he went through the slide show of charts and graphs which illustrated why a return to double-digit inflation is unlikely.
The only moment of anything like humor came when one of the experts was asked about the global economy, and what will happen if no action is taken. “Europe has ‘kicked the can’ down the road until there is no road left,” he said, “and no can, either.”
Then he paused thoughtfully before adding, “But they’re still kicking.”