Mortgage rates plunge to 7-month lows

Inman News Thursday, February 19, 2004

Lack of inflation pushes 30-year fixed down to 5.58%

Mortgage interest rates this week fell to lows not seen since July, as job market woes and the declining dollar highlighted the vulnerability of the U.S. economy, according to surveys conducted by mortgage buyer Freddie Mac and Bankrate.

In Freddie Mac’s weekly survey, the 30-year fixed-rate mortgage averaged 5.58 percent for the week ended today, down from 5.66 percent last week. This is the lowest the 30-year fixed-rate mortgage has been since the week ending July 11, 2003, when it was 5.52 percent.

The average for the 15-year fixed-rate mortgage this week is 4.87 percent, down from last week’s average of 4.96 percent. This is the lowest the 15-year fixed-rate mortgage has been since the week ending July 11, 2003, when it was 4.85 percent. Points on both the 30- and 15-year averaged 0.6.

One-year Treasury-indexed adjustable-rate mortgages averaged 3.53 percent this week, with an average 0.6 point, down from 3.57 percent last week. This is the lowest the one-year ARM has been since the week ending July 4, 2003, when it averaged 3.49 percent.

“Mortgage rates this week are at seven-month lows and teetering on the 45-year-low levels of last summer,” said Frank Nothaft, Freddie Mac chief economist. “There continues to be no sign of inflation on the horizon and, as a matter of fact, core inflation is at a generational low.

After several weeks at a virtual standstill, mortgage rates have tumbled to a seven-month low. The average 30-year fixed-rate mortgage fell from 5.71 percent to 5.58 percent, according to Bankrate.com’s weekly national survey of large lenders.

The average 30-year fixed mortgage rate is now the lowest since July 2, 2003. The mortgages in this week’s survey had an average of 0.35 discount and origination points.

The 15-year fixed-rate mortgage popular for refinancing dropped by a similar amount, from 5.02 percent to 4.91 percent. The jumbo 30-year fixed-rate mortgage sank 14 basis points to 5.78 percent, while the one-year adjustable-rate mortgage fell 10 basis points to a record low of 3.6 percent. A basis point is one one-hundredth of one percentage point.

Mortgage rates moved lower over the past week in response to several factors. Among them were: Alan Greenspan’s Congressional testimony that repeated the Fed’s intent to keep interest rates low; prevailing uncertainty in the job market; and continued purchases of Treasury securities by foreign central banks amid the dollar’s decline. The combination pushed bond yields and mortgage rates lower. Mortgage rates are closely related to the yields on long-term government bonds.

The following is a sampling of Bankrate’s average 30-year-mortgage interest rates this week in some U.S. metropolitan areas.

New York ? 5.68 percent with 0.05 point

Los Angeles ? 5.54 percent with 0.58 point

Chicago ? 5.67 percent with 0.15 point

San Francisco ? 5.61 percent with 0.43 point

Philadelphia ? 5.58 percent with 0.13 point

Detroit ? 5.47 percent with 0.46 point

Boston ? 5.69 percent with 0.03 point

Houston ? 5.51 percent with 0.65 point

Dallas ? 5.51 percent with 0.61 point

Washington, D.C. ? 5.53 percent with 0.44 point

Copyright 2004 Inman News

Greater Phoenix home sales soar amid war, struggling recovery

(from asu.edu)

As the economy was just beginning to show signs of recovery, the Greater Phoenix resale housing market rebounded to a frenetic pace during the second quarter of 2003. The 7,890 homes recorded sold in June set a monthly record, exceeding the previous record of 6,790 homes in April 2002. This activity brought the second quarter resale market to a quarterly record of 19,845 sales – well ahead of the previous 17,555 sales record set in 2001. By the end of the second quarter, the year-to-date sales total stood at 34,880, compared to 29,980 for YTD 2002 and 30,825 for YTD 2001.

“This recording activity represents the end point of a decision-making process that probably began in late 2002 or early 2003,” said Jay Q. Butler, director of the Arizona Real Estate Center. “Even with the weak economy and concerns about the war in Iraq, low mortgage rates spurred the continued strength of the housing market, demonstrating that people retained confidence in their live-in investment.”

The median home price was $155,000, compared to $158,750 for the previous quarter and $144,000 in second quarter 2002. “Since the Greater Phoenix area is so large, the median price can range significantly from $365,000 in North Scottsdale to $89,750 in the central western areas of the city of Phoenix,” Butler noted.

Following a pattern comparable to the single-family market, the resale townhouse/condominium housing sector set a quarterly record of 4,165 sales; the previous record of 3,685 units was set in second quarter 2002. For YTD 2003 the activity stands at 7,380 units, up from 6,660 homes for YTD 2002. As a source of affordable housing and investment opportunities, the median price strongly increased from last year’s $95,700 to the current $103,375. This market can also have significant range in median prices, from $166,450 in North Scottsdale to $88,700 in North Mesa.

The median square footage for a single-family home recorded sold in second quarter 2003 was 1,670, larger than the 1,640 square feet reported a year ago. In the townhouse/condominium sector, the median square footage was 1,175, up from 1,170 square feet reported a year ago.

· Since second quarter 2002, recorded sales in the city of Phoenix increased from 5,080 to 5,410 sales, while the median sales price increased to $127,930 from $118,000. Since Phoenix is a geographically large city, the median prices can range significantly such as $83,950 in the Sky Harbor area to $194,000 in the Union Hills area. The townhouse/condominium sector increased from 965 to 1,045 sales, while the median price increased from $85,000 to $91,000.

· The Scottsdale resale market improved from last year’s 1,800 recorded sales to 2,035. The median sales price rose from $294,000 to $327,250. The median resale home price is $365,000 in North Scottsdale and $167,250 in South Scottsdale. The townhouse/condominium sector in Scottsdale improved from 785 to 975 sales, while the median price increased from $143,000 to $152,500.

· The Mesa resale housing market grew strongly from 2,170 to 2,460 sales, while the median price increased from $132,000 to $139,900. The townhouse/condominium sector improved from 505 to 560 sales, while the median home price rose from $87,950 to $90,000.

· Glendale increased from 1,540 to 1,715 recorded sales, while the median sales price increased from $134,500 to $143,000.The townhouse/condominium sector declined from 175 to 145 sales, while the median price increased from $71,950 to $76,030.

· In comparison to a year ago, the Sun City resale market increased from 420 to 505 sales, with the median price rising from $100,000 to $116,000. Resale activity in Sun City West remained at 310 recorded sales, but the median price decreased from $142,250 to $140,000.The townhouse/condominium market in Sun City improved from 310 to 325 sales and the median sales price increased from $74,500 to $77,000. In Sun City West, sales increased from 100 to 110 sales and the median price rose from $91,000 to $102,000.

· The resale market in Gilbert grew from 895 to 1,225 sales, while the median price increased from $163,200 to $172,900. The townhouse/condominium market was stable at 65 sales, while the median price increased from $110,000 to $118,000.
· For the city of Chandler, the resale market improved from 1,360 to 1,665 recorded sales, while the median price increased from $154,000 to $160,000. The townhouse/condominium market also improved from 180 to 215 sales and the median price increased from $101,900 to $107,000.

· The resale market in Tempe moved from 590 to 610 sales, with the median sales price rising from $156,750 to $168,780. The townhouse/condominium sector improved from 250 to 295 sales, while the median price increased from $102,500 to $106,000.

· The highest median sales price was in Paradise Valley at $814,800, with a median square footage of 3,775.

· In the West Valley, the following communities represent 6 percent of the resale market, up from 5 percent a year ago.

o Avondale improved from 220 to 280 sales, with the median sales price rising from $137,000 to $147,000.
o El Mirage grew from 55 sales (median price $104,700) to 120 sales ($115,000).
o Goodyear increased from 170 sales ($155,000) to 230 sales ($167,000).
o Surprise grew from 355 sales ($131,000) to 525 sales ($140,000).

Brent

Another year, another record. Home sales just went through the roof in 2003.

This isn’t just an isolated instance for Scottsdale. Phoenix home sales were up 8.4% for the year. Mesa home sales rose 14.8%. Chandler sales were 22% higher than 2002. Incredible. For the annual statistics, go to our Annual Trends section.

Prices also went on a tear in December with the median and average home price in Scottsdale reaching new highs. The median home price in Scottsdale rose 26%, year-over-year. That’s a lot of high-end sales. The average home price in Scottsdale went over $500,000 for the first time. The median price almost hit $400,000, coming in at $397,000. For the full statistics, see our tables on the next page.

As one of the fastest growing metropolitan areas in the country, we expect the real estate market to continue strong for the foreseeable future.

My advice? For buyers, buy. I can’t get any simpler than that. If you want to increase your wealth, buy real estate. Look, if you buy a home for $300,000, putting down 20%—$60,000, and prices appreciate just at the what the National Association of Realtors is forecasting for next year, 4.6%, you’re talking about a 23% return on your money, and that’s before you take into account the deduction for your interest. What’s that saying? Beg, borrow or steal to buy real estate.

For sellers, pricing, as always, is the key. If you price your property in-line with the market and the property’s condition, you’ll sell your home faster and for more money. Overprice it and you will have to wait for the market to catch up. Also, at this time of year there will be fewer buyers around, be flexible with what offers you do receive.