News last week was a little mixed, but now that New York Fed chair William Dudley has retired, the impact of his departure is being felt throughout the market. However, a new report from the Mortgage Bankers Association shows good news for our strong market — home purchase applications are posting gains.

With a quickly changing market and so many variables at play, consult our most-trusted mortgage expert — Bob Johnson (AKA BobMortgage) the senior mortgage adviser at the nation’s oldest private lender, Wallick & Volk. Should you lock or float? Find out today in the Mortgage Report on CandysDirt.com

Home Mortgage Fees

According to a survey by Bankrate, Texans pay more in home mortgage fees than any other state in the U.S.

The study, which ranks closing costs for loans including lender origination fees and other charges typically associated with obtaining a mortgage, showed that Texas has the highest fees across all 50 states. That’s a sharp increase from placing 13th last year, as Texans are paying an average of $3,046 to get a $200,000 mortgage. Compare that with the $2,265 Bankrate says Nevadans pay. Or the $2,366 you’ll be charged for a comparable loan in Tennessee. New Yorkers pay $2,892 on average

“New mortgage regulations are the biggest reasons why closing costs went up over the past year,” said Holden Lewis, a senior analyst at Bankrate. “The good news is that some lenders have not increased fees.”

But are these figures necessarily true? Jump for more perspective …

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monthly_payment 1-affordability

I love using real estate apps on my phone. Every time I drive by a “For Sale” sign in a neighborhood, I pull out my phone and queue up one of my favorite listing apps (yes, I have more than one on my phone!) and check out the property and sometimes other ones nearby.

Now, if I was actively looking for a home and wanted to know what kind of rate I could get and how much my monthly mortgage payment would be on a property, well, most listing apps don’t offer that service. And if they do, the information isn’t always accurate.

But Realtor.com, the site that prides itself on having the most accurate listing information on the web, says it’s fixed that issue for good.

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Dallas Housing Prices Go up

According to the most recent report from CoreLogic, the Dallas-Plano-Irving MSA ranked seventh in year-over-year home price growth among the 100 statistical areas the firm measures in its Housing Price Index with a 9.4 percent increase in prices (excluding distressed sales) through the year ending in December 2013.

Houston, which ranked sixth, showed a 10.7 percent increase in prices YoY. Leading the pack was the East Los Angeles suburban MSA of Riverside-San Bernardino-Ontario, Calif.

CoreLogic’s report showed some pretty optimistic predictions for 2014, saying that home prices, excluding distressed sales, should rise 9.4 percent over the next year, or 10.2 percent overall. That’s a decline from 2013 numbers, which had 11 percent growth in home prices nationwide. Still, national housing prices are 18 percent below their August 2006 peak.

“Last year, home prices rose 11 percent, the highest rate of annual increase since 2005, and 10 states and the District of Columbia reached all-time price peaks,”said CoreLogic chief economist Dr. Mark Fleming. “We expect the rising prices to attract more sellers, unlocking this pent-up supply, which will have a moderating effect on prices in 2014.”

Goodness knows we could use some of that moderating effect in Dallas, where investors have bought up many of the homes usually purchased by first-time homebuyers, and the prices of single-family homes are keeping younger buyers out of the market.

Lance Armstrong Lake Austin

We knew 2013 was a banner year for Dallas Realtors as our market pulled itself up by its bootstraps and posted post-recession growth that amazed even the most seasoned brokers. But according to research from the Real Estate Center at Texas A&M University, the market posted year-over-year numbers that showed Texas flexing its economic muscles like never before.

Numbers are up across most demographics, with condo sales, luxury sales, and investment properties getting snatched up at record paces.

“The Texas real estate market showed strength in sales volume and price all year long and the fourth quarter was no exception,” said Texas Association of Realtors chairman Dan Hatfield. “We’ve now seen year-over-year increases in both sales volume and price every quarter for more than two years. This makes it clear – demand for Texas homes is strong and enduring.”

We agree, as the Texas tech industry continues to boom in Austin, pushing up prices and demand reminiscent of the Bay Area’s unfettered growth. High salaries and limited inventories — the statewide numbers show a precipitous drop to a 3.6-month supply of homes (6.5 is recommended for balance between supply and demand) — have resulted in huge price increases. But, as Candy pointed out, not all growth is good for everyone. As prices increase, housing affordability decreases, pushing out lower wage earners.

But Austin’s growth isn’t isolated, as every metropolitan area in Texas posted sales volume and price increases in the fourth quarter of 2013. According to the report, 60,998 single-family homes were sold in the state during the fourth quarter — 6.78 percent more than fourth quarter 2012. Median home prices increased 8.48 percent from fourth quarter 2012 to $172,600, and the average home price was a whopping $226,216 — up 8.88 percent from Q4 2012.

Real Estate Center economist Jim Gaines Ph.D. explained: “One thing that is notable about the price increases seen in the fourth quarter is that they are relatively consistent across the state. Those increases are being seen in markets of every size, not just in the largest Texas markets, so that indicates broad-based appreciation for Texas real estate.”

“Demand for Texas homes in 2014 should continue, but it’s possible that a shortage of inventory could inhibit sales volumes,” Gaines added. “The steady price increases we’ve seen recently should help alleviate that, enticing more sellers into the market, but buyers should continue to expect to compete for desirable properties.”

Interesting outlook for 2014. What do you think? Will the growth price-wise lure more sellers to the market?

sb10065161a-004

First-time homebuyers are finding it harder and harder to get into their dream home.

The National Association of Realtors said that first-time homebuyers make up only 28 percent of the national housing market in a Jan. 28 new story, the lowest number since the organization started measuring the demographic in 2008. According to the NAR, first-time homebuyers typically make up about 40 percent of the market, but several factors are keeping them from purchasing a home, including higher competition for lower priced properties, which are being swept up by investors at increasingly high rates.

Cash purchases accounted for 42.1 percent of all U.S. home sales in December, up from 38.1 percent in November, and up from 18 percent a year prior, according to RealtyTrac.

Tight credit is also preventing younger home buyers from qualifying for a mortgage to buy a home, as mortgage lenders require higher down payments. FHA loans, which many first-time home buyers turn to for the low downpayment requirements, have seen their market share decrease recently after an increase in premiums and fees this year made them less attractive to some.

However, Fannie Mae and Freddie Mac are lending more to first-time buyers, according to a report from Inside Mortgage Finance. The share of financing for first-time home buyers by the mortgage giants reached 19.5 percent in December, up from 14.1 percent a year prior.

Dallas agents have noticed this trend, too. Keller Williams Urban agent Britt Lopez says that in 2012 and 2013, first-time homebuyers made a huge impact on the market, coming off the fence to buy properties in the $300K to $400K range. In those two years, first-timers made up about 60 percent of her client base.

“I believe that the improvement in our basic economy here in Dallas has been the catalyst for the influx of ready, willing, and able buyers into the market,” Lopez added. “I also think that the interest rates and mortgage requirements play a huge part in the buying temperature. Potential buyers pay very close attention to the media regarding mortgage statistics and real estate prices. If a threat of rising rates and prices looks imminent then they will rush to buy now.”

On the other hand, some buyers have been squirrelling away, renting to save up for a down payment, waiting for the perfect time and perfect house to make the perfect investment. While planning is a great asset, sometimes buyers have missed out on deals by waiting too long.

“I believe that there are many buyers who have been ready for a while with their credit and down payment money, waiting for the most opportune time to buy. They watch and wait and pounce as soon as the right property comes available,” Lopez said. “The shortage of property has caused multiple offers to be much more common with many first-time buyers having to try for several homes before they get one.”

Kathy Murray has found that many first-time buyers have saved up for a considerable down payment — a must now that zero-down financing is more rare than a black rhino. Murray says she sees many first-time buyers with at least 20 percent down, but hasn’t closed on a first-time deal yet for 2014.

With new mortgage qualifications and increasing rates, it’s likely we’ll see fewer first-time buyers for the remainder of 2014. What do you think?

Hamtons Home Bitcoin

This Hamptons home can be yours for $799,000, or 1,445 in Bitcoin … wait, that’s 1,444 in Bitcoin … no, it’s 1,445. Yeah, 1,445.

While the value of Bitcoin, an alternative currency launched in 2009, is still wildly fluctuating, the novelty isn’t.

But this listing, a Southampton, NY, cottage owned by Phillip Preuss, isn’t the only property where the owners are testing the waters with alternative currency. Take this mansion in Las Vegas’ exclusive Spanish Trail neighborhood, which is marketed for $7.85 million, or 14,190 in Bitcoin.

Spanish Trail Home Bitcoin

So, is this a marketing ploy, or do these sellers really think that accepting payment in alternative currency will get them the buyer they seek? From the WSJ story:

“There might be international buyers, or a younger computer whiz who came into a little bit of coin overnight,” says Mr. Preuss, who is 42 and originally from Germany. “I’m expanding my buyer base.” Mr. Preuss, who works in international equity sales, has a small investment in the currency, having purchased about $100 worth of bitcoin in June, an investment that has appreciated significantly since then.

Because a bank is not involved, fees for bitcoin transactions can have fewer fees than traditional bank transactions, which Mr. Preuss says he also found appealing. With no underlying mortgage on the home, Mr. Preuss says he’d most likely hold onto the bitcoin if someone were to use the virtual currency to purchase his home. “I believe in the longevity of bitcoins,” he says.

It remains to be seen whether bitcoin sales will take off in real estate.

“I think at this point it’s nothing more than a marketing technique of getting eyeballs to a website, which can help sell a property,” says Jonathan Miller, president of appraisal firm Miller Samuel. “I don’t take this very seriously, but it certainly catches your attention.”

And this from the Las Vegas Review-Journal:

bitcoin“The advantage is that we’re expanding our market and adding some notoriety,” said [homeowner Jack] Sommer, who’s looking to downsize now that his seven kids are grown and have moved out.

[Bitcoin merchant Julian] Tosh agreed that bitcoin could open Sommer’s home to a global audience.

“There are a bunch of people who have bitcoins, and they’re dying for a place to spend it,” he said. “If you increase awareness of potential buyers, you could tap into new markets.”

I am more likely to agree with the appraiser, Jonathan Miller, who considers it a marketing technique. But in the long-run, I’m really interested to see what the implications are when you buy a home with Bitcoin. Will that affect appraisals? Credit history?

What are your thoughts?

US-POLITICS-ECONOMY-BUDGET-SHUTDOWN

As Joanna told us earlier, the shuttering of Washington, D.C. is taking a toll on the real estate market somewhat. You may recall Paige Phelps, who worked in Dallas for People Newspapers then for The North Texas Food Bank.

“It’s a USDA rural home loan (I’m in Marfa now) and I’ve been approved,” says Paige. “It’s just they can’t close on government loans during the shutdown. Due to the government shutdown, USDA is closed until further notice and we are not able to close/fund until we hear otherwise. I have extended the lock through 10/9/13. This is also the same day that the loan completely expires. If we do not close and fund by the 9th, I will need to have updated bank statements and paystubs. We are researching now to find out if that would involve sending your loan back to USDA again to be updated or not. Since we can’t contact anyone at USDA right now, our underwriters are trying to figure that piece out for us. I wish I had better news for you. #killmenowMarfa, Texas

Bummer. The folks at Inwood Bank here in Dallas tell me they received several calls today from real estate agents who were informed by their lenders that they would not be able to close on their purchase transactions at the end of the month due to the government shut-down.

Well, maybe they need to find different lenders?

“During the mortgage crisis of 2008, it was very difficult for borrowers to find a lender willing to make jumbo loans,” says Robert Poe, senior vice president. “Inwood National Bank was there for borrowers.”

Robert says Inwood Mortgage has set aside a limited amount of funds for a limited time to meet the needs of the local community. Since Inwood National Bank has the ability to fund and retain these loans, the government shut-down will not affect their ability to close these loans on time. As always, they will approve these loans in-house and will use local appraisers to perform the appraisal.

CD: I understand that lenders are not able to verify social security numbers or verify IRS returns because the IRS offices are closed, too? You don’t need these departments to proceed?

RP: That’s right, because we don’t have to sell these loans in the secondary market. They stay right here under our roof, so we don’t have so many hoops to jump through.

CD: How long before you think this might reach critical levels, if at all?

RP: Whenever it affects someone’s ability to close on a house, it is affecting people and their financial lives and could possibly get worse.

For more information, contact Inwood Mortgage Group at (214) 351 – 8730.