Great Article from CNBC.

More Americans are renting homes today than at any time in more than half a century.

As a result, more investors are looking to cash in on that trend as landlords of single family rental homes. If you’re one of them, you want to know where you’ll get the most bang for your buck. Try this ZIP code: 33434.

That is the finding of HomeUnion, one of several companies that help investors find, purchase, renovate, manage and sell single-family rental homes. With so much real estate data available now, most of these companies are compiling lists of best bets.

HomeUnion is offering a list of projections for investors looking to hold and rent properties over the next five years. Its analysts are considering factors beyond just vacancies and rent appreciation, examining permitting activities for both apartments and single-family homes, as well as area job growth and school rankings. HomeUnion updates its data each quarter.

“We’re looking at the supply-and-demand factors in each market and all of the neighborhoods within those markets,” said Steve Hovland, director of research. “As we get new information, we apply that to our methodology.”

ZIP code Submarket Metro Area Annualized Total Return School Rating
19035 Gladwyne, Penn. Philadelphia 6.9% 86.9
30078 Snellville, Ga. Atlanta 5.8% 72.5
33158 Palmetto Bay, Fla. Miami 6.8% 83.9
33327 Weston, Fla. Fort Lauderdale, Fla. 6.6% 70.5
33434 Hamptons at Boca Raton, Fla. West Palm Beach 8.1% 87.9
34677 Oldsmar, Fla. Tampa 5.7% 78.6
37062 Fairview, Tenn. Nashville 6.5% 70.6
44023 Chagrin Falls, Ohio Cleveland 5.6% 70.8
45255 Forestville/Cherry Grove Cincinnati 5.9% 75.7
46280 North Indianapolis Indianapolis 5.4% 71.9
48322 West Bloomfield Township, Mich. Detroit 6.9% 74.4
60016 Des Plaines, Ill. Chicago 6% 76.4
63043 Maryland Heights, Mo. St. Louis 5.5% 71.9
66223 Overland Park, Kan. Kansas City 6.2% 97.4
73003 Edmond, Okla. Oklahoma City 5.4% 90
75022 Flower Mound, Texas Dallas 5.6% 84
77059 Clear Lake City, Texas Houston 5.6% 76
85259 North Scottsdale, Ariz. Phoenix 5.5% 88
91602 North Hollywood, Calif. Los Angeles 5.4% 71.4
97224 King City, Ore. Portland, Ore. 5.8% 81.9

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Rates are above 1% for the first time since 2008. Time

The Federal Reserve raised short-term interest rates another quarter percentage point Wednesday. No surprise there. If only you could talk the central bank into a game of high-stakes, no-limit hold ’em. The Fed doesn’t have a poker face — and that’s the way it’s supposed to be.

Fed Chair Janet Yellen and her Federal Open Market Committee counterparts go out of their way to make sure short-term interest rate moves are anything but a surprise to world markets. But even an expected interest rate increase can have some very real consequences.

Here’s what this latest move means for mortgage rates.

The Fed hikes, mortgage rates head-fake

Before this third short-term rate hike in just six months, fixed-rate mortgages were barely off 2017 lows. The experts have been predicting a gradual rise in home loan interest rates for months, but rates have head-faked their way lower since the Fed’s last rate increase in March.

Why is that happening?

“Even though the U.S. economy is really looking pretty strong right now, particularly in the job market, the rest of the world is lagging behind,” says Mike Fratantoni, chief economist for the Mortgage Bankers Association. “So central banks elsewhere are still aggressively stimulating their economies and keeping their rates low, and that’s acting as a bit of an anchor on longer-term rates.”

MORE:  Calculate your monthly mortgage payment

With this foreign demand for safe assets, the MBA expects U.S. mortgage rates “are going to be held back by the lower rates abroad over the next couple of years.”

Where mortgage rates will end 2017

The three economists we interviewed say they expect the Fed to raise rates by another quarter-point before the end of the year. That will make for a full percentage point increase within one year.

“This move by the Fed to increase short-term rates was expected, and we expect to see another increase from them before the end of the year,” says Sean Becketti, chief economist for Freddie Mac. He notes that 30-year fixed mortgage rates are still close to a seven-month low, “which is very good news for those potential homebuyers in the market and even those who may be looking to refinance.”

However, Freddie Mac expects mortgage rates to “start rising slowly as the year progresses, yet still remaining right around 4%,” Becketti adds.

Frank Nothaft, chief economist at CoreLogic, says, “Fixed-rate mortgage rates are likely to gradually edge higher over the next six to 12 months. Rates are likely to rise to 4.25% to 4.50% by the end of 2017.”

Fratantoni also expects 30-year rates to be near 4.5% by the end of the year — and above 5% by the end of 2018.

“We think [the Fed will] hike once more in September and then probably three or four times in each of the next couple of years,” Fratantoni says.

The Fed is not only raising interest rates

The Fed is planning another action that could affect mortgage rates: selling off its portfolio of mortgage-backed securities.

During the financial crisis, the Fed lowered short-term rates to zero. In an effort to further stimulate the economy by lowering long-term interest rates, such as mortgage rates, it began buying mortgage-backed securities. Higher demand raises bond prices, resulting in lower yields.

The Fed now holds more than $1.7 trillion in mortgage-backed securities, about one-third of all those outstanding. Now the central bank is looking to get back to a “more normal operating environment,” Fratantoni says, with a smaller portfolio — and holdings only in U.S. Treasurys.

“They’re not going to get there all at once,” he says. “Our expectation is that … [the Fed] will begin to lay out a schedule for how they’ll treat that balance sheet over time. This will be another factor putting some upward pressure on mortgage rates.”

A ‘double whammy’ for home buyers

Every time rates sneak up a half percentage point or so, experts declare it will be the death of refinancing. It never really is.

Sure, the share of mortgage refinance lending has dropped significantly during the past year. In 2016, refis accounted for 48% of all loans, and that’s expected to drop to between 21% and 31% by the end of 2017, according to the Urban Institute. But homeowners still have ample opportunities to refinance their loans.

Yet, even gradually increasing interest rates affect the housing industry. Nothaft says the “double whammy” of rising mortgage rates and higher home prices are thwarting potential home buyers.

“For example, with fixed-rate loan rates up by 0.5 [percentage point] since last summer, and house prices in national indexes up at least 5%, the monthly principal and interest payment is more than 10% higher than it was last summer, adding to affordability challenges for first-time buyers,” Nothaft says.

Hal Bundrick is a staff writer at NerdWallet, a personal finance website. Email: Twitter: @halmbundrick.

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Monday Morning Cup of Coffee takes a look at news coming across HousingWire’s weekend desk, with more coverage to come on larger issues.

On Friday, Politico obtained a draft of the proposed Department of Housing and Urban Development budget. Like the reporting from March when the White House initially released its plan, the draft shows a considerable $6 billion in cuts to spending on affordable housing and community development programs for 2018’s fiscal year, a move affordable housing advocates called “immoral” and a hit to some of Trump’s own support base.

Politico reports that “the document puts increased responsibility on state and local governments and calls for the private sector to do more to meet community needs, a key goal of HUD Secretary Ben Carson.”

From the article:

The administration is seeking to cut spending on affordable housing and community development and wants mortgage lenders to fund technology fixes at the Department of Housing and Urban Development, according to a budget draft obtained by POLITICO. The proposal also eliminates the Housing Trust Fund, a program financed by Fannie Mae and Freddie Mac profits.

In all, the request cuts funding by some $6 billion for fiscal year 2018, to about $40 billion. The draft, dated May 4, might not reflect the administration’s final spending request, which is expected next week. A HUD spokesman did not respond to requests for comment.

The budget “recognizes a greater role for state and local governments and the private sector in addressing community development and affordable housing needs,” the document states.

Also on the chopping block for the agency is a giant cut to the $3 billion Community Development Block Grant program, a state and local program that benefits low- and moderate-income communities and supports economic development projects, including roads, sewers and housing.

The budget also eliminates Choice Neighborhoods revitalization grants and the HOME Investment Partnerships Program, which leverages private funds to expand the supply of affordable housing. Rental assistance to tenants would fall $974 million to $19.3 billion, with the elimination of a housing program for veterans and reduced spending on Section 8 and other voucher programs and capital funding for public housing would fall by two-thirds.

Diane Yentel, president of the National Low Income Housing Coalition, said the spending plan is “immoral.”

“The budget reflects a cruel indifference to the millions of low-income seniors, people with disabilities, families with children, veterans, and other vulnerable people who are struggling to keep a roof over their heads,” Yentel told Politico.

But the proposed budget is not all cut, cut, cut… Politico also reports that HUD’s mortgage agencies would get small funding increases and the administration wants to levy $30 million in fees on lenders who sell mortgages through the Federal Housing Administration, money that would be used to upgrade technology and risk-management systems. Also included is a small increase in staffing for FHA loan-seller Ginnie Mae. The proposed budget, in its current form, also maintains funding to support and enforce the Fair Housing Act.

Is non-QM the next emerging market in mortgage lending? Sanjiv Das, the CEO of Caliber Home Loans seems to think so…

In an interview published last night on the newly invigorated Institutional Risk Analyst, Das dishes on MSRs, Ginnie Mae and so much more.

Here’s what he had to say about the non-QM Market:

“There are a large number of customers who were impacted in the 2008 crisis who are on the fringes but want to get back into the mainstream in terms of lending.  The mainstream lenders are not ready for that.  So those of us who are backed by private equity and can be more opportunistic in a responsible way can work with these customers.  If you look at the non-QM and even QM, people who cannot qualify for a Fannie/Freddie loan are a newly emerging market.”

Last week was all about avocados after an Australian millionaire ruffled Millennials’ feathers by saying that the generation should stop buying avocado toast and coffees to be able to afford a home.

35-year-old real estate developer Timothy Gurner told Australia’s 60 Minutes: “When I was trying to buy my first home, I wasn’t buying smashed avocado for $19 and four coffees at $4 each,” he said. “We’re at a point now where the expectations of younger people are very, very high. They want to eat out every day; they want travel to Europe every year.

“The people that own homes today worked very, very hard for it,” he said, adding that they “saved every dollar, did everything they could to get up the property investment ladder.”

Article courtesy of:   Ephraim Vecina  –  Mortgage Broker News


Innovative product features enticingly low 5-year fixed rate

One of Canada’s largest independent mortgage financing companies has introduced an innovative solution to the tighter fiscal climate that ensued in the wake of recent regulatory changes.

“As those in the mortgage business are painfully aware, Department of Finance rule changes have made low-ratio mortgage insurance far more expensive—well over 200% more expensive in some cases. For mortgage finance companies who rely on insurance for securitization, that’s a serious problem,” markets observer and founder Robert McLister wrote in a recent piece for CMT.

With over $61 billion in assets under administration, MCAPhas launched its new “MCAP 79” mortgage last week, deemed a “more inventive solution” that “comes with an eye-catchingly low 5-year fixed rate (as low as 2.29% at 65% LTV). There’s also a 1% fee, which can be capitalized into the mortgage. MCAP uses the 1% upfront fee to offset its insurance and capital costs.”

“Given a 65% LTV, equal payments, and a mortgage held to maturity, the effective rate of the MCAP 79 beats virtually all competing rates above 2.52,” McLister explained.

“Assuming the mortgage is not broken early, the MCAP 79 is currently the best low-ratio 5-year deal from any broker lender. Albeit, breaking the mortgage early can change that because the 1% fee is non-refundable and there’s a $300 to $500 reinvestment charge in the first three years.”

The offering features MCAP’s standard high-quality loadout, including a 120-day rate hold, reasonable prepayment charges, 20 per cent prepayment privileges, and availability on ‘insurable owner-occupied purchases with LTVs up to 79%.”

Qualified applicants require credit scores greater than 720. The maximum property value is $1 million.

Article from

Prospective home buyers view a kitchen while touring a house for sale in Helotes, Texas.

If you’re out shopping for a home this weekend, bring your checkbook.

There may still be ice on the ground in much of the nation, but the spring housing market is the hottest it’s been in a decade. Consumer sentiment in both the economy and the housing market is rising and that is translating into strong demand from homebuyers. The trouble is, the supply of homes for sale is incredibly weak and getting weaker. What is for sale is selling fast.

The typical home that sold last month went under contract in 60 days, eight days faster than one year ago, according to a new report from Redfin, a real estate brokerage. Nearly 15 percent of all homes listed for sale in February were off the market within two weeks, up from 11.7 percent last year. This is the fastest February market Redfin has recorded since it began tracking in 2010.

The speed and the competition are combining to push home prices higher. Redfin recorded a 7 percent annual jump in median sale prices in February. Homeowners now have a lot of equity. In fact, total home equity hit a new peak at the end of last year, according to research by the Federal Reserve.

“While great for homeowners, continuously strong price growth across the U.S. since 2012 has posed significant challenges for first-time buyers, especially given such low supply in affordable price-tiers,” said Nela Richardson, Redfin’s chief economist. “There is a silver lining on the horizon, however. Rising prices and increased equity may tip the scales for homeowners who have been delaying their decision to move up, which could add much-needed starter-home inventory to the market.”

More homeowners think now is a good time to sell, according to the latest housing sentiment survey from Fannie Mae. More also consider now to be a good time to buy as well, but the same is not true for renters. Confidence in home buying is slipping among renters as affordability sinks.

“Inventory conditions are even worse than a year ago, and home prices and mortgage rates are on an uphill climb,” said Lawrence Yun, chief economist for the National Association of Realtors. “These factors are giving many renter households a pause about it being a good time to buy, even as their job prospects improve and wages grow. Unless there’s a significant boost in supply levels this spring, these constraints will, unfortunately, slow or delay some prospective buyers’ pursuit of purchasing a home.”

Construction workers building a new home in Miami, Florida.

Home builder sentiment rises to highest level in 12 years  

Regionally, Seattle was the fastest market in February, according to Redfin, with nearly half of all homes going under contract in just 12 days. Oakland, California, and Denver followed with 15 and 18 days on the market, followed by San Jose, California, (21) and San Francisco (28). The majority of those homes sold above list price.

As for supplies, Rochester, New York, had the largest decrease in inventory, down 42 percent compared to a year ago. Buffalo, New York, down 38 percent; Seattle, down 35 percent; and Omaha, Nebraska, down 35 percent; also saw far fewer homes available on the market than a year ago.

On the bright side, Provo, Utah, saw the biggest jump in listings, up 31 percent from a year ago, followed by Knoxville, Tennessee, up 22 percent; and New Orleans, up 16 percent.