Home Affordability

Have We Hit The Bottom Yet in Portage Indiana Real Estate

People across Portage Indiana have been asking me lately about real estate prices. “Do we see light in the tunnel?” they ask.  Since real estate markets move in up and down cycles, economists and homeowners alike all want to know when market trends are entering a new phase. Can they time their move to be positioned ahead of the next wave? 

Whether you are talking about the stock market, real estate, or gold bars, timing the market is not so easy to predict. And in real estate, it depends on where you live.

This week we have had economists from the National Association of Realtors and the National Association of Home Builders both giving generally negative views about the real estate market. This suggests to many homeowners and armchair Realtors that the market for Portage Indiana is headed for even more price declines.

It’s not that simple. When analyzing home sales data from other nearby communities, we see the real estate market has acted differently, depending on the location.

And don’t forget about those first 3 rules of real estate: Location, Location, Location.

Since the recession began in 2007 Portage Indiana real estate market has had a roller coaster ride as median home prices have dipped 3 separate times with rallies in between. Your community may be different. For example, median home prices in Crown Point Indiana crashed about 15% way back in 2008 and they have skidded around at roughly the same median home price ever since.

Consider that, overall,  real estate has been in the current down cycle for over 3 years now. We also know that it is the lack of jobs that is holding back the overall economy.

So we do not really need the help of technical books and investment seminars to know that, in general, as long as you have a decent job, this is a terrific time to buy a home in Portage Indiana. Home affordability is at an all time high with interest rates at historic lows and depressed home prices all around. 

Will home prices go down further? Maybe yes. Maybe no. If you wait too long for home prices to hit rock bottom in Portage Indiana, you may find yourself getting in after the real estate market has already gone up.  Or if interest rates have clicked up another notch, your delay in taking action will affect your payment even more.

My advice? Do what is best for your family and your situation. Your house is shelter first; an investment second. If you are trading up, don’t stress out about how much your current home was worth in 2005. Rather, focus on the great deal you are getting on a better home which you might not have been able to afford back then.

Change will always come. Experienced Realtors are here to provide you with the information you need to make informed decisions in any market. If you’re ready to learn more about the Portage Indiana real estate market and what steps you need achieve home ownership, contact me to help get you moved.

*Photo: Market Timing for Dummies by Joe Duarte MD – BN.com

Home Affordability

Home Affordability Near All Time Highs But For How Long

With home prices still relatively low and mortgage rates trolling near their all-time best levels, it’s no surprise that home affordability is extraordinarily high in Schererville Indiana and most U.S. markets.

According to the quarterly Home Opportunity Index as published by the National Association of Home Builders, more than 72 percent of all new and existing homes sold between January-March 2010 were affordable to families earning the national median income.

It’s the second highest reading in the survey’s history.

Of course, on a city-by-city basis, home affordability varies. 

In the first quarter of 2010, for example, 98.7% of homes sold in Bay City, Michigan were affordable for families earning the area’s median income and in Indianapolis, the percentage was almost 95 percent.

Indianapolis has held the top quarterly ranking for close to 5 years now.

On the opposite end of the spectrum, the New York-White Plains, NY-Wayne, NJ region earned the “least affordable” metropolitan area for the 8th consecutive quarter.  Just 20.9% of homes are affordable to families earning the local median income.

The rankings for all 225 metro areas are available on the NAHB website but regardless of where your town ranks, home affordability remains high as compared to historical values but it likely won’t last long.  Home values are recovering in many markets and mortgage rates won’t stay this low forever.

All things equal, buying a home may never come this cheap again. If you were planning to buy later this year, consider moving up your timeframe.

Home Affordability

How Iceland’s Volcanoes Are Helping Mortgage Rates Fall

Mortgage rates and home affordability in Northwest Indiana have improved lately, thanks to an unlikely ally — Mother Nature.

In the 7 days since Iceland’s Eyjafjallajökull erupted, ash clouds have grounded planes, disrupted businesses, and stranded exports in warehouses worldwide.

It’s a drag on commerce that’s spilled over onto Wall Street. As experts debate the potential for future seismic activity, traders are taking some of their investment risk off the table. 

In trading circles, it’s called “safe haven buying”. When the market gets cloudy, investors often move their cash into relatively safe assets.  This includes government-backed securities — mortgage-bonds among them.

Demand for bonds rise, pushing up prices and driving down rates.

Conforming and FHA mortgage rates touched a 3-week low earlier this week.

Volcanic eruptions and like natural disasters remind us: mortgage rates change for all sorts of reasons. Some we can predict, most we cannot. There’s literally thousands of influences on the U.S. mortgage market.

If you’ve been shopping for a home or floating a mortgage rate, luck’s been on your side. Mortgage rates have fallen post-Eyjafjallajökull. However, as ash clouds dissipate and business resumes worldwide, investors will regain their collective appetite for risk and safe haven buying will reach its natural end.

When that happens, mortgage rates will rise.

Therefore, use the seismic uncertainty to your advantage.  Consider locking your mortgage rate sooner rather than later — while rates are still low.

Contact James K Barath in Northwest Indiana to Qualify for Your FREE FHA Home Loan Approval Today!

Home Affordability

Consumer Sentiment, Mortgage Rates, Home Prices…Oh My!

Consumer Sentiment has been on the rise since February 2009 and it’s something to which home buyers in Northwest Indiana should pay attention. 

The affordability of your next home in Chesterton, Crown Point, Highland, Munster, Portage, Saint John, Schererville and Valparaiso may hinge on consumer confidence.

As the economy recovers from a near-the-brink recession, many of the elements of a full recovery are in place.  Business investment is returning, household spending is expanding, and financial systems are gaining strength. 

Consumer confidence is at a 2-year high.

What’s missing from the recovery, though, is jobs growth.  Another net 20,000 jobs were lost in January. Data like that hinders economic growth.

That said, twenty-thousand jobs lost is a much better figure than the several hundred thousand that were shed per month throughout early-2009, but it’s still a net negative number.  Not only does household income drop when Americans lose jobs but so does the average American’s confidence in his or her own economic future.

This is one reason why jobs growth is so closely watched by Wall Street — jobs are linked to higher confidence levels which, in turn, is believed to spur consumer spending.

Consumer spending represents 70% of the U.S. economy.

As confidence rises, it could be good news for the economy, but bad news for home buyers. More spending expands the economy and, all things equal, that leads mortgage rates higher. 

Same for home prices. More confidence means more buyers which, in turn, squeezes the supply-and-demand curve in favor of sellers.

Early this morning, the University of Michigan released its February Consumer Sentiment survey to the surprise of many analysts. For the time being the lower-than-expected consumer sentiment reading is providing stability for mortgage rates and home affordability in Northwest Indiana.

If the reading is higher-than-expected in the coming months, prepare for mortgage rates to rise and home affordability to worsen throughout Northwest Indiana.

Contact James K Barath in Northwest Indiana to Qualify for Your FREE FHA Home Loan Approval Today!

Home Affordability

Labor Day Weekend Can Be Tough on Home Affordability

Volume figures to be light on Wall Street today as traders get a head start on Labor Day weekend.  It could make shopping for a mortgage a bona fide challenge.

Expect rate volatility this morning and afternoon and, therefore, by extension, expect wild swings in the Home Affordability Index.

As mortgage rates rise and fall, monthly mortgage payments do, too.

The relationship between “vacation days” and mortgage rate volatility stems from 2 facts — (1) Conforming mortgage rates are based on the price of mortgage-backed bonds, and (2) mortgage-backed bonds trade just like stocks.  You can’t make a deal without matching a buyer and a seller at a specific price.

With so many traders on vacation today, therefore, there are fewer opportunities to match buyers and sellers.  As a result, expect mortgage bond prices to rise and fall with more velocity than on a “normal” day – especially because the August jobs report was just released.

So far this morning, mortgage rates have been jumpy and are higher versus Thursday’s close.

That said, mortgage pricing is fluid, changing every minute of every day.  Today, expect those changes to be exaggerated.  If you have a chance to lock a favorable rate, consider taking it because, before long, the rate could be gone.

Need more expert advice? Ask the team of Certified Mortgage Planning Specialists at Benchmark Mortgage.

Home Affordability

How The “Fed Minutes” Can Change Mortgage Rates And Home Affordability

Mortgage rates fell after the Federal Reserve released its April 28-29, 2009 meeting’s internal notes Wednesday.

Officially known as “Fed Minutes”, the report is an in-depth account Federal Reserve’s last get-together, detailing the discussions and decisions that create our country’s monetary policy.

It’s the lengthy companion to the Federal Reserve’s brief, post-meeting press release.

For comparison’s sake, the Federal Reserve’s April 29 announcement contained 383 words. The minutes of that same meeting held 5,754 words. The extra words offer extra details about what the next monetary steps might be for the nation’s policymakers.

This is a big deal to markets because investors are always looking for clues about what’s next — especially considering how the April Fed Minutes showed that group discussed increasing its $1.25 trillion mortgage market commitment to something bigger.

Remember that the Fed’s mortgage-buying program is largely credited with keeping mortgage rates low this year. If there’s more buying ahead, that should help rates stay similarly low. Mortgage rates fell Wednesday in anticipation of a move like that. For now, though, the Fed Minutes are just talk.

As economic conditions change later this year, so might the Federal Reserve’s stance.

Home Affordability

Home Affordability Increases On Weak Retail Sales Data

Home affordability improved again Wednesday after the government reported worse-than-expected results for April’s Retail Sales report.

Mortgage rates edged lower for the third consecutive day.

The impetus for the rate rally this week may be a long-awaited stock market correction. After touching multi-year lows in mid-March, the Dow Jones added 30 percent going into last Friday.

It has since lost close to 300 points and as those dollars leave the stock market, they’re finding their way toward bonds.

The demand is pushing bond prices up which, in turn, causes rates to fall.

Yesterday morning, the rally in rates picked up steam on the heels of April’s Retail Sales report. With figures off a half-percent from March and roughly 7 percent from 2008, investors are concerned that consumer spending may not be as strong into the summer months as previously expected.

Consumer spending is important because it comprises two-thirds of the economy and is believed to be the way out of the current recession.

If expectations of a recovery caused mortgage rates to rise recently, it makes sense that a revision of those expectations would cause rates to fall.

Markets are fickle, however, and the slightest bit of “good news” could pump cash back into stocks at the expense of bonds. Until then, however, enjoy the low rates — they may not last long.