More good news on the housing front this week as reports on new and existing home sales both beat analysts’ expectations and showed signs of a bottoming despite a monthly decline for March. Possibly the best news this week was Wednesday’s report from the Federal Housing Finance Agency that showed home prices actually edged up .7% from January to February for single family residences.
These encouraging housing reports coupled with some better than expected corporate profit reports have reignited the stalled rally on Wall Street sending stocks higher for the week. The gains for stocks, however, came at the expense of the bond market with the ten-year Treasury note getting pounded sending the yield to right at 3% in Friday trading.
Mortgage rates, while slightly higher, have managed to resist the rise in bond yields thanks to the Fed’s ongoing program of purchasing up to $750 billion in mortgage-backed securities. Rates remain near record lows, and we are even beginning to see some relief in the Jumbo market where rates have remained stubbornly close to 7% for thirty-year fixed.
I have some interesting anecdotal news this week as well. I actually had two bidding wars break out this week over a condo and a single family home I was trying to finance – something I haven’t seen since before the crash. This further convinces me that this market has bottomed and is on its way back up. I am seeing more appraisals make value and, better yet, come in above sales price, which is another sign of a resurgent market.
The challenge remains the strict underwriting standards and shortage of loan programs that have choked off what would otherwise be a flood of business. I am closing primarily condos but, for every ten applications I take, three may go beyond the pre-approval stage and actually close due to the limited financing options available. Yet as more and more of these deals get closed, and as more buyers rush to snap up the bargains before rates begin to rise, the crippling “distressed market” designation should eventually be lifted for Florida real estate. This is crucial to providing our potential customers the same access to the mortgage programs and less-stringent underwriting guidelines enjoyed in our neighboring states.