Freddie Mac: Rising Mortgage Rates DO NOT Lead To Falling Home Prices

Recently, Freddie Mac published an Insight Report titled Nowhere to go but up? How increasing mortgage rates could affect housing. The report focused on the impact the projected rise in mortgage rates might have on the housing market this year.

Many believe that an increase in mortgage rates will cause a slowdown in purchases which would, in turn, lead to a fall in house values. Ultimately, however, prices are determined by supply and demand and while rising mortgage rates may slow demand, they also affect supply. From the report:

 “For current homeowners, the decision to buy a new home is typically linked to their decision to sell their current home… Because of this link, the financing costs of the existing mortgage are part of the homeowner’s decision of whether and when to move.

Once financing costs for a new mortgage rise above the rate borrowers are paying for their current mortgage, borrowers would have to give up below-market financing to sell their home.

Instead, they may choose to delay both the sale of their existing home and the purchase of a new home to maintain the advantageous financing.”

The Freddie Mac report, in acknowledging this situation, concluded that prices are not adversely impacted by higher mortgage rates. They explained:

“While there is a drop in the demand for homes, there is an associated drop in the supply of homes from the link between the selling and buying decisions. As both supply and demand move together in this way they have offsetting effects on price—lower demand decreases price and lower supply increases price.

They went on to reveal that the Freddie Mac National House Price Index is…

“…unresponsive to movements in interest rates. In the current housing market, the driving force behind the increase in prices is a low supply of both new and existing homes combined with historically low rates. As mortgage rates increase, the demand for home purchases will likely remain strong relative to the constrained supply and continue to put upward pressure on home prices.”

The following graph, based on data from the report, reveals what happened to home prices the last six times mortgage rates rose by at least 1%.

Freddie Mac: Rising Mortgage Rates DO NOT Lead to Falling Home Prices | Keeping Current Matters

Bottom Line

Whether you are a move-up buyer or first-time buyer, waiting to purchase your next home based on the belief that prices will fall because of rising mortgage rates makes no sense.

Source: Keeping Current Matters, 3-22-18

Posted on March 22, 2018 at 3:50 pm
Beverly & Doug Moser | Category: Uncategorized

Fed announces rate hike, mortgages already on the rise

Fed announces rate hike, mortgages already on the rise


In a widely anticipated move, newly appointed Federal Reserve Chairman Jerome Powell on Wednesday announced a modest benchmark interest rate hike of between 1.5 percent and 1.75 percent amidst continued optimism over economic growth in 2018.

In the first of what economists predict will likely be three adjustments in 2018, the Fed called for a 25 basis point increase, and a fed funds rate of 1.63 percent, at the conclusion of the Central Bank’s two-day Open Market Committee meeting. The new benchmark rate is the highest since September 2008, near the beginning of the housing crisis.

“Information received since the Federal Open Market Committee met in January indicates that the labor market has continued to strengthen and that economic activity has been rising at a moderate rate,” according to a statement issued by the Fed on Wednesday. “Job gains have been strong in recent months, and the unemployment rate has stayed low.”

Powell said median projections for inflation now stand at 1.9 percent this year, 2 percent in 2019 and 2.1 percent in 2020, all within the target rate of 2 percent.

“In making our policy decisions over the next few years we will continue to aim for inflation of 2 percent while sustaining the economic expansion and a strong labor market,” said Powell during a press conference on Wednesday. “In the committee’s view, further gradual increases of the federal funds rate will best promote these goals. By contrast, raising these rates too slowly would raise the risk that monetary policy would need to tighten abruptly down the road, which could jeopardize the economic expansion.”

The movement of the Fed rate — up or down — can put pressure on mortgage interest rates, which often follow the lead of the 10-year Treasury note, otherwise known as the “long bond.” Freddie Mac’s Primary Mortgage Market Survey reports the average 30-year fixed rate hovering at 4.44 percent, but Wednesday’s benchmark rate hike has already been folded into current mortgage rates, Greg McBride, chief economist of bankrate.comtold USA Today.

Current rates are still considered historically low compared to pre-recession levels. In the year 2000, for example, the average 30-year fixed rate stood at 8.21 percent, and in 2007 it hovered at 6.22 percent, according to Freddie Mac. But Steve Rick, chief economist of CUNA Mutual Group, also said in an interview with USA Today that additional increases throughout the year could push the 30-year fixed as high as 5 percent by December.

Research from Zillow issued Wednesday suggested that such a hike could lift costs associated with buying a home in nearly 20 metropolitan markets above historical averages.

“If mortgage rates reach 5 percent by the end of this year, and assuming home value appreciation over the course of the year in line with Zillow’s forecast, almost half of the nation’s 35 largest markets will be less affordable than they were historically,” wrote Zillow Senior Economist Aaron Terrazas in a statement issued Wednesday ahead of the rate hike. “If rates reach 6 percent – near the upper end of forecasters’ expectations – homes in 20 of the country’s 35 largest markets will be less affordable than historic norms.”

Ruben Gonzales, an economist at Keller Williams, said alarm over inflation could lead to increased volatility in mortgage rates and steeper hikes later this year. Nonetheless, he forecasted that historically low inventory, not higher rates, would have more influence over the housing market, thus allowing wiggle room for more adjustments in 2018.

“We believe that limited supply is likely to remain the predominant factor restricting home sales this year, and that there is some room for higher mortgage rates before the sales pace of existing homes is substantially impacted,” said Gonzales in a prepared statement. “We are currently projecting existing-home sales for 2018 to be even to slightly below 2017 sales.”

Lawrence Yun, chief economist for the National Association of Realtors, said potential homebuyers should be prepared for mortgage rate hikes over the next several years, but added that increased construction of residential housing in the near-term could help balance rising housing costs.

“The tight labor market will hurry-along the Fed to raise rates,” said Yun in a prepared statement. “Housing costs are also rising solidly and contributing to faster inflation. The one thing that could slow the pace of rate increases would be to tame housing costs through an increased supply of new homes. Not only will more home construction lead to a slower pace of rate hikes, it will also lead to faster economic growth. Let’s put greater focus on boosting home construction.”

The rate hikes are the first since the departure of Janet Yellen in early February. Nominated by President Barack Obama to succeed Ben Bernanke in 2014, she helped guide a fragile economy following the Great Recession by deploying fewer interest rate increases than many of her predecessors to offset high unemployment at the time.

Powell, a member of the Federal Reserve’s Board of Governors since 2012 and currently the Central Bank’s 16th chairperson, is largely viewed as a moderate who would carry on Yellen’s legacy while favoring legislation that would roll back post-2008 banking regulations.

Powell is the first Fed chair in four decades without a degree in economics. Prior to joining the Board of Governors he served as a clerk in the United States Court of Appeals for the Second Circuit in New York before diving into private practice at the investment bank Dillon, Read & Co. and, a decade later, the Carlyle Group. Along the way, he was appointed to the Treasury Department by President George W. Bush and worked at several high-profile private investment firms before being nominated in 2012 to the Fed.

In his first comments since his appointment as chair, Powell spoke cautiously about Trump administration trade policies when asked by reporters, steering away from controversial economic views by the president in recent months including the enactment of lumber, aluminum and steel tariffs.

“First, there’s no thought, I think, that changes in trade policy should have any affect on the current outlook,” said Powell. “The second thing I would say is that a number of participants reported in their conversations with business leaders around the country that trade policy has become a concern going forward for that group.”

Source: Jotham Sederstrom, Inman News, 3-21-18

Posted on March 21, 2018 at 9:20 pm
Beverly & Doug Moser | Category: Uncategorized

Home Prices: The Difference 5 Years Makes

The economists at CoreLogic recently released a special report entitled, Evaluating the Housing Market Since the Great Recession. The goal of the report was to look at economic recovery since the Great Recession of December 2007 through June 2009.

One of the key indicators used in the report to determine the health of the housing market was home price appreciation. CoreLogic focused on appreciation from December 2012 to December 2017 to show how prices over the last five years have fared.

Frank Nothaft, Chief Economist at CoreLogic, commented on the importance of breaking out the data by state,

“Homeowners in the United States experienced a run-up in prices from the early 2000s to 2006, and then saw the trend reverse with steady declines through 2011. After finally reaching bottom in 2011, home prices began a slow rise back to where we are now.

Greater demand and lower supply – as well as booming job markets – have given some of the hardest-hit housing markets a boost in home prices. Yet, many are still not back to pre-crash levels.”

The map below was created to show the 5-year appreciation from December 2012 – December 2017 by state.

Home Prices: The Difference 5 Years Makes | Keeping Current Matters

Nationally, the cumulative appreciation over the five-year period was 37.4%, with a high of 66% in Nevada, and a modest increase of 5% in Connecticut.

Where were prices expected to go?

Every quarter, Pulsenomics surveys a nationwide panel of over 100 economists, real estate experts, and investment and market strategists and asks them to project how residential home prices will appreciate over the next five years for their Home Price Expectation Survey (HPES).

According to the December 2012 survey results, national homes prices were projected to increase cumulatively by 23.1% by December 2017. The bulls of the group predicted home prices to rise by 33.6%, while the more cautious bears predicted an appreciation of 11.2%.

Where are prices headed in the next 5 years?

Data from the most recent HPES shows that home prices are expected to increase by 18.2% over the next 5 years. The bulls of the group predict home prices to rise by 27.4%, while the more cautious bears predict an appreciation of 8.3%.

Bottom Line

Every day, thousands of homeowners regain positive equity in their homes. Some homeowners are now experiencing values even higher than before the Great Recession. If you’re wondering if you have enough equity to sell your house and move on to your dream home, contact a local real estate professional who can help!

Source: Keeping Current Matters, 3-7-18

Posted on March 7, 2018 at 10:32 pm
Beverly & Doug Moser | Category: Uncategorized

6 Things Professional Burglars Don’t Want You to Know

Even though a burglary occurs every 20 seconds in the U.S., you can still protect yourself without installing top-dollar security features.

Home burglary generally has a pattern; criminals are looking for an easy target they can rob fast. Learn from the pros. Here are six tips from career burglars you can use to defend your home and prevent break-ins.

1. Nighttime Burglaries Aren’t the Best Time

Burglars like to break in to homes during daytime hours—the last thing criminals want is to encounter someone at home. Weekdays are ideal for thieves, since weekend schedules are too unpredictable. Between 12:30 p.m. and 2:30 p.m. are the most popular times because there’s a high chance people will be away at work or school.

2. They Know When You’re Not Home—Thanks to Social Media

While it’s tempting to post about your vacation to your social media feed, wait to share those trip photos and exotic location check-ins until you’re back home. Criminals scout public social media accounts like Twitter, Instagram, Facebook, and Foursquare to find victims.

Locating someone’s home address using basic information from their social media profile is surprisingly easy. In one survey of convicted burglars, more than 10 percent say they used social media to determine who was out of town. The same survey found one burglar stole over $250,000 in electronics and jewelry from 33 women he saw in public—he used GPS data embedded in photos they posted online to find their homes.

Even if all your accounts are private, that old friend from high school or new neighbor down the street could be a potential criminal. Never post what times you’re not home or how long you’ll be out.

3. They Don’t Like Your Security Practices

Burglars want nothing to do with alarm systems (whether they’re from the best home security companies or not). Homes without a security system are almost 300 percent more likely to be targeted for a break-in.  If you do install an alarm system, make sure you guard it with a strong code. Don’t use your house number or birthday, and clean any dirt or grease off your keypad so a burglar won’t guess your code based off the numbers you’ve hit the most. Unlocked windows, unused deadbolts, poorly lit homes, and residences without security systems are prime targets for burglars, so make sure you are using the security features you already have.

Also, tricks that make it look like you’re home really work, professional burglars reveal. Burglars run from properties that look like people are inside. Motion sensor lights, bright flood lights, and timed lights are inexpensive security features for a home’s exterior that scare criminals away. TVs or radios left on, as well as cars parked in the driveway, make burglars nervous that someone is home.

4. Great Targets Advertise Their Weapon Supply

If you’re a proud gun owner, that won’t scare away burglars—it entices them. A gun is stolen roughly every two minutes in the U.S., so homeowners should be sure to always lock up their guns. NRA bumper stickers on a car or Smith & Wesson signs on a house advertises that there are lots of guns to steal.

5. Shrubs and Architecture Make Great Hiding Spots

Tall bushes are favorites of burglars since they offer an obstructed view from the street and an easy way to hide from neighbors. Keep shrubs and large landscaping features trimmed. If you want big plants by your windows, choose something thorny that will detract a burglar, like roses or cacti.

Think twice about large architecture features, too, like fences, half walls, and big fountains. Thieves are searching for crimes of opportunity, and such decor elements give a burglar more time to hide and plot their method of entry. The best defense is a clear view of your front porch.

6. Valuables in the Open Help Them Decide on a Target

Keep your expensive items out of sight. You’re making it too easy for a burglar by advertising the type of valuables they can steal. Don’t leave a new MacBook in front of your first-floor kitchen window, iPads on your living room ottoman, or even a nice car in a garage window with a clear sight line to the street. Key hooks—especially with labels for each key—need to be concealed out of view from windows, too.

“A burglar appreciates such kindness, but you will find it expensive when you have to replace all the locks after a break-in,” says Mike Fraser, former professional burglar and host of the BBC show Beat the Burglar.

Fraser also advises to leave large family calendars out of view. You’re inviting a break-in by detailing when you’ll be away, Fraser says. This advice goes for any ID documents, too. Mail or other personal information left in plain view is a gold mine for a criminal looking to easily steal your details for identity theft.


Using these tips can help you protect your home from break-ins. Also, be sure to research crime rates and trends in your neighborhood and state. Just like some houses are safer than others, some states are safer than others.  Where does your state rank?


Source: Krystal Rogers-Nelson, RIS Media’s Housecall, 4-21-17

Posted on March 7, 2018 at 10:27 pm
Beverly & Doug Moser | Category: Uncategorized

Competition Is Coming, Are You Thinking Of Selling Your Home?

The number of building permits issued for single-family homes is the best indicator of how many newly built homes will rise over the next few months. According to the latest U.S. Census Bureau and U.S. Department of Housing & Urban Development Residential Sales Report, the number of these permits were up 7.4% over last year.

How will this impact buyers?

More inventory means more options. Lawrence Yun, NAR’s Chief Economistexplained this is good news for the housing market – especially for those looking to buy:

“This rise in single-family housing construction will help tame home price growth, and the increase in multifamily units should continue to help slow rent growth.”

How will this impact sellers?

More inventory means more competition. Today, because of the tremendous lack of inventory, a seller can expect:

  1. A great price on their home as buyers outbid each other for it
  2. A quick sale as buyers have so little to choose from
  3. Fewer hassles as buyers don’t want to “rock the boat” on the deal

With an increase in competition, the seller may not enjoy these same benefits. As Chief Economist Nela Richardson, added:

“Because existing home inventory has been so low for so long, new construction is taking a larger share of the market…Builders meet the buyers and see the demand firsthand.”

Bottom Line

If you are considering selling your house, you’ll want to beat this new competition to market to ensure you get the most attention for your listing and the best price.

Source: Keeping Current Matters, 3-6-18

Posted on March 6, 2018 at 8:19 pm
Beverly & Doug Moser | Category: Uncategorized

Are Home Values Really Overinflated?

Last week, the National Association of Realtors (NAR) released their most recent Existing Home Sales Report.According to the report:

“The median existing-home price for all housing types in January was $240,500, up 5.8 percent from January 2017 ($227,300). January’s price increase marks the 71st straight month of year-over-year gains.”

Seventy-one consecutive months of price increases may have some concerned that current home values may be overinflated.

However, at the same time, Zillow issued a press release which revealed:

“If the housing bubble and bust had not happened, and home values had instead appreciated at a steady pace, the median home value would be higher than its current value.”

Here are two graphs that help show why home prices are exactly where they should be.

The first graph shows actual median home sales prices from 2000 through 2017.

Are Home Values Really Overinflated? | Keeping Current Matters

By itself, this graph could heighten concerns as it shows home values rose in the early 2000s, came tumbling down and are now headed up again. It gives the feel of a rollercoaster ride that is about to take another turn downward.

However, if we also include where prices would naturally be, had there not been a boom & bust, we see a different story.

Are Home Values Really Overinflated? | Keeping Current Matters

The blue bars on this graph represent where prices would be if they had increased by the normal annual appreciation rate (3.6%). By adding 3.6% to the actual 2000 price and repeating that for each subsequent year, we can see that prices were overvalued during the boom, undervalued during the bust, and a little bit LOWER than where they should be right now.

Bottom Line

Based on historic appreciation levels, we should be very comfortable that current home values are not overinflated.

Source: Keeping Current Matters, 3-1-18

Posted on March 1, 2018 at 10:17 pm
Beverly & Doug Moser | Category: Uncategorized

Lease to own: A new program for first time home buyers in Portland

PORTLAND, OR (KPTV) – In Portland’s booming real estate market, bidding wars and cash buyers can make it tough for first time home buyers to compete. But, a new program is now trying to help those buyers break into the market.

The Home Partners of America’s new Ownership Conversion Pilot Program is essentially a new twist on the old lease to own program.

Home Partners tells FOX 12 applicants can choose from any home on the market $650,000 or less that’s right for them and also meets their criteria. Households must make at least $50,000 a year to qualify for the program.

“I’m a huge fan of the program,” Licensed Broker Jeanie Williams of Berkshire Hathaway Home Services said. “I meet a lot of buyers who aren’t ready to buy, usually there are credit issues and this opens the doors for them.”

Williams says once a client is approved for the program a purchase price is established.

“It’s based on property taxes, HOA’s, things like that. So we look at the price point, what they want and then go out searching like any other buyer and agent,” Williams said.

Home Partners will then buy the home and lease it to an applicant with pre-determined rent. That rent will increase annually but at a set rate tenants agree on. The company will then provide a tenant with the right to purchase the home down the road at a preset price.

The Home Partners of America’s pilot program is so new many tenants rights organizations in Portland did not want to weigh in on this story. The Portland Housing Bureau also declined to comment.

“There’s a lot of first time home buyers who are not prepared to purchase today, perhaps they don’t have the down payment funds that are necessary, or maybe financial circumstances does not deem them ready, this will serve those consumers in the market,” Ayoub Rabah, Senior VP of Marketing for Home Partners of America said.

Rabah tells FOX 12 the company’s pilot program was first tested out in Texas but has since expanded to 40-plus real estate markets across the country.

He says his company is particularly interested in Portland because of the demand for housing.

“We’re very excited about the housing market in Portland, there’s a lot of opportunity and need,” Rebah added.

For Melody Oxford and her family of four, the program seems to be a good fit. It made it possible for her to get into a home in southeast Portland.

“They really just made the dream become more of a reality for us,” Oxford said.

She’s hoping to purchase the home by the end of this year.

“To be able to get into a home that it would take you years to do, to come home to it every day, it’s a reminder why we’re going to work, what we’re working for,” Oxford said.

For more information about the pilot program visit:

Source: Fox 12 Staff, Fox 12 Oregon, 2-22-18

Posted on February 26, 2018 at 10:16 pm
Beverly & Doug Moser | Category: Uncategorized

Year of the Dog

Happy Chinese Lunar New Year! As we usher in the Year of the Dog, here are some tips from the National Association of REALTORS® to make your pooch more comfortable in your home.

Source: Jane Dollinger, National Association of Realtors, 2-16-18

Posted on February 26, 2018 at 10:12 pm
Beverly & Doug Moser | Category: Uncategorized

The Mortgage Process: What You Need To Know

Some Highlights:

  • Many buyers are purchasing a home with a down payment as little as 3%.
  • You may already qualify for a loan, even if you don’t have perfect credit.
  • Take advantage of the knowledge of your local professionals who are there to help you determine how much you can afford.

Source: Keeping Current Matters, 2-23-18

Posted on February 23, 2018 at 5:05 pm
Beverly & Doug Moser | Category: Uncategorized

Should I Wait Until Next Year To Buy? Or Buy Now?

Should I Wait until next Year to Buy? Or Buy Now? [INFOGRAPHIC] | Keeping Current Matters

Some Highlights:

  • The Cost of Waiting to Buy is defined as the additional funds it would take to buy a home if prices & interest rates were to increase over a period of time.
  • Freddie Mac predicts interest rates to rise to 5.1% by 2019.
  • CoreLogic predicts home prices to appreciate by 4.3% over the next 12 months.
  • If you are ready and willing to buy your dream home, find out if you are able to!

Source: Keeping Current Matters, 2-16-18

Posted on February 20, 2018 at 5:49 pm
Beverly & Doug Moser | Category: Uncategorized